Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

MESSAGE FROM THE QUEEN

QUEEN'S SPEECH (ANSWER TO ADDRESS)

THE VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's answer to the Address, as follows:

I have received with great satisfaction the loyal and dutiful expression of your thanks for the speech with which I opened the present Session of Parliament.

Oral Answers to Questions — HOME DEPARTMENT

Unlawful Actions

Mr. Tony Banks: To ask the Secretary of State for the Home Department on how many occasions in the last two years his actions have been declared unlawful in the courts. [1351]

Mr. Skinner: To ask the Secretary of State for the Department on how many occasions his policies have been the subject of court decisions. [1356]

Mr. Jim Cunningham: To ask the Secretary of State for the Home Department what has been the cost to public funds since 1979 of judicial reviews following which his actions as Minister have been judged unlawful. [1358]

The Secretary of State for the Home Department (Mr. Michael Howard): Hundreds of applications for judicial review are made each year. Detailed information on individual cases is not collected centrally. The vast majority of cases are judged by the courts to be without foundation. No information is available on the total cost of the applications.

Mr. Banks: I actually asked how many of the Home Secretary's actions over the past two years had been declared unlawful. The answer is squillions, it seems to us. If the Home Secretary were not so smug, complacent and arrogant, he would not get turned over in the courts so often. Why does he not start listening to his own advisers and experts, and other people who know about such things? Or is he satisfied to carry on following his own prejudices? If he carries on like that, he will become known as the old lag of British politics.

Mr. Howard: I am sure that the hon. Gentleman will be encouraged and much comforted to know that the

proportion of cases that succeed is not as high as it used to be. The difficulty is that the many cases that fail just do not seem to get as much publicity as the few that succeed.

Mr. Skinner: Why does the Home Secretary not have the nerve to admit that he has persistently offended—nine times since he has had his present job? Is he aware that Government money is available for sending young children who are persistent offenders on safari trips? We would be prepared to fund one for him. Better still, he could go to California, where if someone persistently offends, not nine times but three times, it is "Three strikes and you're out."

Mr. Howard: I had not intended to visit California in the summer recess, but now that I know that the hon. Gentleman will fund my visit I shall certainly consider going.

Mr. Cunningham: The Home Secretary has demonstrated by his reply that he is a bad bookkeeper. Can he explain why, although the Prime Minister said that there would be an extra 5,000 police officers over the next two or three years, the right hon. and learned Gentleman, through the local authority standard spending assessments, has cut £80 million off local authority budgets—budgets that have to provide for the fight against crime?

Mr. Howard: The hon. Gentleman is entirely wrong. The police settlement has increased by 4 per cent. for the forthcoming year, and that will include funding to pay for the extra officers that the Prime Minister announced to the party conference. We are making good the promises that we made.

Mr. Charles Wardle: If the European Court of Justice feels able to make a mockery of his decisions on excluding foreign nationals on the ground of national security, what does my right hon. and learned Friend think that it will do with our internal frontier controls and the legally worthless 1985 declaration, which for years senior officials and legal advisers have told the Government has no protection in law?

Mr. Howard: As my hon. Friend knows, we have made clear on many occasions our determination to maintain our frontier controls. As for this morning's decision, to which I believe my hon. Friend was referring, it goes not to the substance of the exclusion order-making power, but only to procedures. So far as I can see, the only likely effect is that those subject to it are likely to be detained in custody instead of being allowed to leave the country while the exclusion order is being considered.

Sir Teddy Taylor: How on earth can the Home Secretary justify or explain the European Court's statement that this country unlawfully excluded people who were a threat or a danger to this country solely because we were contravening article 9A of the Maastricht treaty, bearing in mind the assurances which the Government gave to the whole House during the debates on the treaty that security matters were entirely for this particular Government and other democratic Governments? Is not this a terribly serious issue? Will we now have to give compensation from taxpayers' funds to those whom we excluded on the ground of national security?

Mr. Howard: I have some sympathy with the views expressed by my hon. Friend, and I very much regret the European Court's decision. But it is a very narrow and


limited decision which does not deal with the substance of the exclusion order power. The decision deals only with the procedural aspects of that power, and we shall resist— I believe successfully—any claim for compensation that is made.

Sir Ivan Lawrence: Is it not the nature of my right hon. and learned Friend's Department to be subject to more judicial reviews than any other Department? Has life not become impossible for Ministers, whose every administrative decision is challenged in the courts? Is he aware that the courts are spending much more of their resources on dealing with judicial reviews than they want to, bearing in mind the rest of the ordinary activities of the courts? Is it not time that we seriously started to consider reducing the scope of that remedy?

Mr. Howard: It is certainly true that the number of applications for judicial review is increasing considerably. I am surprised at the enthusiasm which is shown for the process by Opposition Members. The shadow Lord Chancellor, Lord Irvine of Lairg, recently warned against
greater activism in judicial review".
He went on to describe some of the views recently expressed by judges as
contrary to the established law and usages of our country".
I have never gone that far.

Mr. Alex Carlile: Does the Home Secretary agree that this morning's decision by the European Court simply declares what is, in almost every case, the existing practice—namely, that prevention of terrorism exclusion suspects are given the opportunity to make representations, that those representations are made to an entirely independent person and that the Government recognise that judicial review is a remedy which is available to all who are affected by Government action if permission is granted by a court? Will he tell his hon. Friends who have been babbling about the effect of Europe on this issue that, in fact, the Government have no difficulty whatsoever with this decision, which does not undermine the provisions of the prevention of terrorism Act in any significant way?

Mr. Howard: It is true that the decision does not undermine the provisions of the prevention of terrorism Act, and we would never allow the provisions of that Act to be undermined. But it is clear that the European Court takes a different view of the procedures that we follow.

Mr. Carlile: It does not.

Mr. Howard: Oh yes it does. We must consider the precise implications of that decision, which—as I have indicated to my hon. Friends—I very much regret. The only consequence of the decision appears to be that people who are suspected will have to be detained in custody, whereas now they do not have to be detained.

Mr. John Greenway: Does my right hon. and learned Friend agree that this House—the sovereign Parliament of the United Kingdom—has, year upon year, made its view on the prevention of terrorism exclusion orders abundantly plain? Does he agree that the House has stated that the Home Secretary should have the power to exclude those people? We are now told that there is something wrong with that arrangement because of a directive agreed

31 years ago when we were not members of the Community. Is not the sovereignty of this House at risk because of the European situation?

Mr. Howard: I would be more concerned if the effect of the decision was in any way to take away the powers of the Home Secretary to decide on exclusion, but it does not do that. The court has made a limited criticism of some of the procedures, but we can adapt our procedures without any difficulty. As I have stated, the only consequence of the decision is likely to be that people will have to be detained in custody while we consider their representations, whereas at present they can leave the country without being detained.

Fire Service

Mr. Jamieson: To ask the Secretary of State for the Home Department what was the original estimate of fire service spending for 1995–96; and by how much this exceeds the amount of the capping limit for England and Wales. [1352]

The Parliamentary Under-Secretary of State for the Home Department (Mr. Tom Sackville): The estimate of revenue spending by fire authorities in England and Wales in 1995–96 is £1,324 million. One metropolitan fire authority—South Yorkshire—set a budget £640,000 above its provisional cap and this was accepted.

Mr. Jamieson: Is the Minister aware that the local authority associations are saying that, nationally, there is an £80 million shortfall on fire service expenditure? Given the grim picture for public expenditure next year, do not we face a serious funding crisis in the fire service? When will the Government listen to the local authority associations, the Audit Commission and many others, and face their responsibility for funding a vital emergency service?

Mr. Sackville: The hon. Gentleman mentions the Audit Commission, which said in its report that at least £67 million-worth of savings could be made if all fire authorities came up to best practice. I have no evidence to suggest that best practice is the maximum efficiency that can be reached. Extensive further efficiencies may be possible. The hon. Gentleman should remember that, in his county of Devon, the standard spending assessment for fire was increased by 9.5 per cent. this year.

Mr. George Howarth: May I welcome the Minister to his new responsibilities? Is he aware that although the Audit Commission report, "In the Line of Fire", suggested where savings might be made, it pointed out that there were serious structural problems in the method of funding fire authorities? Is he also aware that, within the past two years, the chief fire officer commented on the serious possibility of a funding crisis for fire authorities throughout the country? Is it not time that the Government stopped hiding behind statistics and got down to sorting out the serious structural funding problems within the fire services? Are they prepared to stand by and let a vital emergency service drift towards being unable to fulfil its functions?

Mr. Sackville: May I remind the hon. Member for Knowsley, North (Mr. Howarth) that the responsibility for setting budgets for fire services lies with the fire authorities. They must satisfy themselves that they can


fulfil their duties under the Fire Services Act 1947. It is open to them to set a budget above the Government's capping requirements if they can justify it, and one metropolitan county that did that last year had its budget allowed. If the hon. Gentleman is asking for extra spending on the fire service and everything else, how will he fund his party's promised reductions in income tax?

Crime, West Yorkshire

Mr. Sutcliffe: To ask the Secretary of State for the Home Department what plans he has to visit West Yorkshire in the near future to discuss crime levels. [1354]

The Minister of State, Home Office (Mr. David Maclean): My right hon. and learned Friend has no immediate plans to visit West Yorkshire. However, we congratulate West Yorkshire police force on the 10 per cent. reduction in vehicle crime, the 3 per cent. reduction in other theft, and the 5 per cent. reduction in burglary recorded in the 12 months to June 1995.

Mr. Sutcliffe: I congratulate the police, but will the Minister tell us how many extra police officers will be on the beat in West Yorkshire as a result of his proposals? Is he prepared to fund the pilot schemes like the one in my constituency, where two dedicated officers are funded by city challenge? Will he guarantee that, if those schemes are successful, they will receive long-term funding from the Home Office?

Mr. Maclean: The hon. Gentleman is behind the times. He should know that we do not dictate to chief constables how many officers they may have. As a matter of interest, with the funding made available to West Yorkshire since the Government came to power in 1979, there has been a 7 per cent. increase in police officers and a 65 per cent. increase in police civilian staff, allowing more bobbies to go on the beat. This financial year, the chief constable of West Yorkshire plans to recruit more bobbies and hopes to have 135 more this year alone.

Mr. Riddick: May I join my right hon. Friend in welcoming the chief constable's announcement of 135 new police officers by the end of this financial year? Is he aware that the chief constable has managed to achieve that by slimming down the bureaucracy in Wakefield and reducing the number of senior ranks? Does not that show that extra money from the Government is not always needed to put more police officers on the beat?

Mr. Maclean: My hon. Friend is right. That pattern is being repeated throughout the country. In nearly all police forces, chief officers have streamlined senior and middle ranks—particularly inspectors, chief inspectors and superintendents—and used the savings to recruit more constables. That means that more constables are out on the beat. They are available for operational duties and that practice has been encouraged by this Conservative Government. There is also the fact, of course, that the first thing that the Government did in 1979 was to recruit the 8,000 bobbies that that lot let slide.

Mr. Straw: Is the Minister aware that over the three years since the last general election, the number of police officers in West Yorkshire has gone down by 107 and across the country, according to the chief inspector's latest report, by 823—wholly contrary to a pledge given at the last general election of 1,000 more officers on the beat?
Given that broken promise, what guarantee can the Minister give that the latest promise on police numbers of 5,000 over three years is going to be honoured or is that going to be yet another broken promise from the Tories?

Mr. Maclean: With that statistic, as with all the others that the hon. Gentleman uses, especially when he tries to compare falling crime in Britain with crime in other countries, he gets stuck at a particular point in time. He does not like to take the latest, up-to-date facts. He should be aware that the chief constable of West Yorkshire is predicting that by the end of this financial year, he will have 135 more bobbies. If the hon. Gentleman does not understand that getting rid of senior ranks and recruiting constables instead puts more people on the beat, then God help this country if he were ever Home Secretary.

Mr. Jacques Arnold: When my right hon. and learned Friend the Home Secretary visits West Yorkshire and meets the chief constable, could he suggest that when the chief constable deals with the case of PC Godber, the policeman who clipped a young thug round the ear, that police constable should be congratulated rather than disciplined?

Mr. Maclean: I am sure the House heard what my hon. Friend said and no doubt those remarks will be drawn to the chief constable's attention. Neither my right hon. and learned Friend the Home Secretary nor I interfere in these disciplinary matters. Cases such as this come to the Home Secretary on appeal once the procedures have been followed. I could not comment.

Community Policing

Mr. Rendel: To ask the Secretary of State for the Home Department what plans he has to improve community policing in the Thames valley. [1355]

Mr. Maclean: The Government fully support community policing and I want to congratulate the chief constable of Thames valley on setting objectives in the Newbury area to prevent vehicle crime, to prevent burglary, and to prevent misuse of drugs by an active programme of partnership and community intervention.

Mr. Rendel: I am delighted that the Minister congratulates the Newbury police force on its partnership with Newbury district council, which, as he knows, is Liberal Democrat-led. Given the fact that the violent crime record in the Thames valley is currently the second worst in the country and given the amount of money for new policing in the Budget for the next financial year, just how many of the much-trumpeted 5,000 extra police officers are going to be in place by the end of the next financial year?

Mr. Maclean: The hon. Gentleman will have to wait. I am not going to announce at this moment the settlement on police funding. He will have to wait at least an hour for that. The chief constable of Thames valley has been very successful in tackling crime. In the past two years, burglary has come down 20 per cent. total crime 13 per cent. 25,000 fewer crimes have been committed in the Thames valley; and theft is down 17 per cent. Where a chief constable finds that any particular sort of crime is rising, I am sure that he will use the increased resources that we have made available to target that crime. If there


is an increase in robbery or violence, chief constables will use the resources to get those crimes down just as they have tackled other crime.

Mr. Simon Coombs: Speaking from the head-waters of the River Thames, may I say how warmly welcomed in my constituency was the Chancellor's confirmation of the recruitment of an additional 5,000 police officers across the country over the next three years, following as it did the news of the 5 per cent. fall in crime in the county of Wiltshire in the previous year? Will my right hon. Friend bear it in mind that the ability of the chief constable of Wiltshire to deliver good community policing depends to a large extent on his ability to fulfil other responsibilities such as security in the county?

Mr. Maclean: I appreciate what my hon. Friend says. When he studies the settlement that we have made available, not only for Wiltshire but for all the other forces in England and Wales for which my right hon. and learned Friend has financial responsibility, I hope that he will conclude that Wiltshire has been well satisfied and has had not only its ordinary policing needs met but those for its special security responsibilities.

Europol

Mr. Rathbone: To ask the Secretary of State for the Home Department what plans he has to support the functioning of Europol; and if he will make a statement. [1357]

Mr. Howard: We already provide substantial support to the existing Europol drugs unit. We shall build on that commitment when Europol comes into operation. We expect Europol to make a very valuable contribution to the fight against international organised crime, particularly drug trafficking, in the European Union and more widely.

Mr. Rathbone: Although the House will welcome the Home Secretary's commitment to Europol, on which the British Government have given the lead right from its inception, I believe that there is general disappointment at the Government's inability to sign the convention supporting Europol. Can the Home Secretary inform the House that that difficulty will be overcome speedily?

Mr. Howard: I am happy to tell my hon. Friend that the convention was in fact signed in July following the agreement on it reached at the Cannes summit. We intend to ratify it shortly, and I hope that other countries will as well.

Mr. Henderson: As such matters must be dealt with at an intergovernmental level, does the Secretary of State accept that the House should be consulted more systematically on proposals, tentative agreements and agreements? Does he agree that there is a need for inter-country police co-operation to fight racist extremists in Europe? If he does agree, does he intend to conclude an agreement on these matters, and, if so, when?

Mr. Howard: On the hon. Gentleman's first point, the Europol convention was the subject of an explanatory note sent to Committees on 22 February 1994; supplementary notes were submitted on 17 November 1994 and 31 May this year; and the final text was deposited on 28 July.
On the hon. Gentleman's second point, I agree that there ought to be intergovernmental co-operation on racism and xenophobia. That is a very different matter, however, from a legally binding document that would require us to consider changing the laws of the United Kingdom in a way which does not meet our circumstances. That was something that I was not prepared to go along with in Brussels last week. If the hon Gentleman thinks that he would go along with that and that the United Kingdom should have signed up, perhaps he would be clear and say so.

Mr. Fabricant: Does my right hon. and learned Friend agree with me that racism must be fought wherever it happens, whether on mainland Europe, in the United Kingdom or, indeed, in Leicester? Will he join me in condemning the Opposition spokesman, who was reported on "Dispatches" last night, for his outrageous, disgraceful racist comments?

Mr. Howard: We look forward to an explanation from the hon. Gentleman at the earliest possible moment.

Closed Circuit Television

Mr. Pike: To ask the Secretary of State for the Home Department how many closed circuit television schemes are financially supported fully or in part by the safer cities initiative. [1361]

Mr. Maclean: Forty-two CCTV schemes received funding under phase 1 of the safer cities programme, seven are being financially supported under phase 2, and of course 106 schemes were supported by my right hon. and learned Friend the Home Secretary's challenge funding scheme.

Mr. Pike: Will the Minister ensure that schemes such as that in Burnley, which are doing an excellent job, continue to have the necessary finances made available to them? Will he also give an assurance that steps will be taken to stop any illegal use of the tapes made in any of these schemes anywhere in the country?

Mr. Maclean: I can assure the hon. Gentleman that we shall have another round of challenge funding. We have in fact announced another round of funding, and this time we are putting up not just £5 million but £15 million. We are inviting bids from all around the country, from communities large and small. A key condition of the funding is that there will have to be a code of practice on the proper use of video tapes. We shall also insist that if any scheme that is up and running wants any top-up funding, it should have a proper code of practice as well. I condemn totally the irresponsible use of any CCTV images for commercial gain.

Mr. Bellingham: Does the Minister agree that it is not just CCTV tapes which need to be looked at carefully, but police interview tapes? Will he look specifically at the bizarre and worrying case involving one of my constituents who bought, at a car boot sale, 20 police interview tapes marked "Essex and Cambridgeshire Constabulary", which contained highly confidential information, including an interview with a schoolmaster who was alleged to have interfered with a choirboy? That could have been highly damaging to individuals—[Interruption.] I do not know why Opposition Members


are smirking and laughing—it is a serious matter. Will the Minister ensure that such an incident never recurs and will he comment on it?

Mr. Maclean: Inquiries are being made by the police. We must be careful about apportioning blame before the inquiries are completed. I understand from the reports that the police say that they have all their master tapes intact and it is likely, or certainly possible, that the tapes came from a solicitor—from the defence copy of the tapes, possibly from a practice from which a solicitor was eventually disbarred. I understand that to be the case and I would not wish to go further without having more information. I hope that when the facts are fully revealed we will not be blaming the police service.

Mr. Michael: As the Minister knows, the Labour party has encouraged the effective use of CCTV in cutting crime. He will share, as he has suggested, my concern about the sale of films. Does he agree that it would be tragic if public confidence was undermined by people selling surveillance films, whether from the police, the public sector or the private sector? We are willing to help the Home Secretary to pass legislation through the House quickly in this Session to outlaw such activity by anyone in the public or private sector. Will he accept our offer?

Mr. Maclean: I am grateful for what the hon. Gentleman has said. We must be careful and I warn the House that we should not hype up the episode, which is probably just what the promoter of the film wants. We must not get the matter out of proportion. I condemn irresponsible use, but at times it is helpful for the police and others to release certain video tapes or for programmes such as "Crimewatch UK" to show them as it helps detection and prevention.
We do not want to prevent, through hasty regulation, the sensible use of pictures because of a shoddy, poor-quality, over-hyped film. There is hardly any material on the film from public CCTV and the little that was released by the police for promotional purposes was mostly from private videos inside buildings. The quality of the film was worse than Logie Baird's first pictures in 1925—the public should rightly condemn such rubbish by not buying it.

Mr. John Marshall: Does my right hon. Friend think that the safer cities initiative is helped by racist comments such as those uttered on the "Dispatches" programme last night?

Mr. Maclean: I hope that the Opposition will respond quickly with a total denunciation of the comments and the colleague who made them. Racist comments of that nature are unacceptable from any quarter, particularly from Front-Bench spokesmen from a party which hopes one day to be in government.

Bingo

Mr. Hutton: To ask the Secretary of State for the Home Department what proposals he has for deregulating the bingo industry. [1362]

The Parliamentary Under-Secretary of State for the Home Department (Mr. Timothy Kirkhope): We are at present reviewing the controls on bingo clubs as part of the Government's deregulation initiative.

Mr. Hutton: Does the Minister accept the need to establish a level playing field on which all sections of the gambling industry are able to compete against each other fairly? How much longer will bingo clubs in my constituency and elsewhere, which perform a valuable social role in the community, continue to face petty and bureaucratic restrictions on advertising and on the number of coin-operated machines that they contain?

Mr. Kirkhope: I am very pleased that the hon. Gentleman shares my concern and interest in the bingo industry; I have recently seen a number of groups representing the industry. I hope to be able very shortly to address the points that he has mentioned and help the bingo industry to achieve greater success in the future.

Mr. Whittingdale: Does my hon. Friend accept that it is impossible to lose more than a handful of pounds in the course of an evening's visit to a bingo hall, unlike a casino, where literally thousands of pounds can be lost in a short time? Does he agree that there is no reason for bingo to be subjected to the same degree of regulation as the casino industry? Will he consider subjecting the industry to the deregulation process?

Mr. Kirkhope: I shall certainly do so. My hon. Friend is right to refer to the difference between bingo and casinos and other forms of gambling. I am sure that the deregulation process can be selective in that way, but it is important to ensure that those who want to go about perfectly legitimate entertainment such as bingo should be able to do so with the minimum of regulation.

Capital and Corporal Punishment

Mr. Nicholas Winterton: To ask the Secretary of State for the Home Department what plans he has to review the possibility of restoring to the courts the option of capital and corporal punishment. [1363]

Mr. Howard: None. Capital punishment is a matter for the will of the House. I am not satisfied that corporal punishment would be useful in practice. It had virtually fallen into disuse some time before it was abolished.

Mr. Winterton: I am sure that my right hon. and learned Friend would not expect me to be happy with that reply. Does he accept that, as I believe, a decent and civilised society should be permitted to protect itself against an uncivilised, heinous and brutal act? I refer to the killing of women following rape, the killing of children following sexual molestation, the killing of police and prison officers in the course of their duty, killings resulting from terrorist bombs and bullets and killings resulting from premeditated armed robbery.
Is it not right that a civilised society should be able to protect itself from those brutal crimes, and is not the only answer capital punishment? Does my right hon. and learned Friend agree with me, speaking as a grandfather and father, that the phrase, "spare the rod and spoil the child" is more applicable today than it ever has been?

Mr. Howard: I tend to agree with my hon. Friend's last observation, and of course I agree with him that any civilised society must protect itself against barbaric behaviour of the type that he described. Where we differ is that I believe that there are other ways in which that protection can be provided, including the sentence of life imprisonment, but it is important that someone


accountable to the House continues to have a role in deciding how long someone sentenced to life imprisonment should actually serve, including the minimum sentence for those who are convicted of the murder of police officers.

Mr. Soley: If the Home Secretary decided to support capital punishment, would he give an absolute guarantee to the House that he would first develop the scientific skills that were necessary to restore life to a person who had been wrongfully convicted?

Mr. Howard: It is true that the danger of miscarriages of justice and the impossibility of remedying them is one of the strongest arguments against capital punishment.

Mr. Hawkins: Does my right hon. and learned Friend agree that it is highly likely that, if there were a referendum on the re-introduction of capital and corporal punishment, voters would vote for it, as my hon. Friend the Member for Macclesfield (Mr. Winterton) has said?
Does my right hon. and learned Friend also agree that the Leader of the Opposition might consider corporal punishment for his Front-Bench spokesman on inner cities for his appalling racist comments reported on "Dispatches" on Channel 4 last night?

Mr. Howard: We condemn and deplore racist comments, whenever they are made, wherever they are made and whatever quarter they come from. I hope that the Opposition will take seriously the observations that were made in the House this afternoon and take appropriate action.
It is my impression that the Leader of the Opposition administers corporal punishment to members of his Front-Bench team almost daily.

Crime and Unemployment

Mrs. Anne Campbell: To ask the Secretary of State for the Home Department what assessment he has made of the relationship between crime levels and unemployment. [1364]

Mr. Maclean: A wide range of research studies, including those conducted by my Department, have failed to uncover any consistent causal link between unemployment and crime.

Mrs. Campbell: There is no excuse for committing a crime—[HON. MEMBERS: "Hear, hear."]—but does the Minister consider that Government policies that produce high youth unemployment, inadequate youth training programmes and cuts in benefit for the under-25s create conditions in which crime and law breaking can thrive? Are not the Government's policies responsible for the continuing high level of crime?

Mr. Maclean: The admission in the first part of the hon. Lady's supplementary question will keep Alastair Campbell spin doctoring for the rest of this afternoon. If she does not want to believe Home Office research studies and studies from other independent researchers, perhaps she will believe the highly respected chief constable of Strathclyde who, last Saturday, poured cold water on her pet theories about unemployment and crime. If police chiefs throughout the country can see that, and we see it in our research studies, perhaps one day it will get through to the Opposition; but I am not hopeful.

Drug Trafficking

Mr. Spring: To ask the Secretary of State for the Home Department what plans he has to tackle the international trade in illegal drug trafficking.[1367]

Mr. Howard: The Government are committed to vigorous action at home and abroad to tackle international drug trafficking and other serious organised crime. My right hon. Friend the Prime Minister recently announced a series of measures to improve law enforcement in that field, including a role for the Security Service in support of the police. We are also pursuing, with our European partners, an international initiative to improve drug interdiction in the eastern Caribbean.

Mr. Spring: Does my right hon. and learned Friend agree that if illegal drug trafficking is to be combated, a high level of international co-operation will be required? Is he aware of the success of Operation De Niro which, with considerable British help, resulted in 88 arrests world wide and the seizure of $52 million, $11 million-worth of paintings and 9 tonnes of cocaine?

Mr. Howard: I entirely agree with my hon. Friend, and I am grateful to him for giving the House that example. The resources available to many of the organisations that are involved in international drug trafficking are far in excess of those available to a number of nation states. International co-operation, in which we play a prominent part, is essential if we are to combat the activities of those organisations effectively.

Mr. Bermingham: Does the Home Secretary agree that one of the problems involved in fighting crime such as drug trafficking is the fact that Great Britain is an island? Does he agree that the fact that the Government have cut the number of drug enforcement and customs officers and the number of officers available to both coastguards and others, has not really helped to stop the importation of drugs?

Mr. Howard: I entirely reject the hon. Gentleman's allegations. We are now concentrating on more effective measures—particularly the use of intelligence—so that we can target the offenders and deal effectively with this menace.

Immigration and Asylum

Mr. Ian Bruce: To ask the Secretary of State for the Home Department what representations he has received regarding the problem of illegal immigration and bogus asylum applications. [1368]

Sir Michael Neubert: To ask the Secretary of State for the Home Department what steps he is taking to tackle bogus asylum claims and illegal immigration; and if he will make a statement. [1369]

The Minister of State, Home Office (Miss Ann Widdecombe): I have received numerous representations on a wide range of asylum and immigration issues. My right hon. and learned Friend announced to the House on 20 November the further measures that he proposes to take to tackle the problems caused by unfounded asylum claims and illegal immigration.

Mr. Bruce: Does my hon. Friend agree that, by speeding up the handling of applications by genuine


asylum seekers, we shall improve the position for those who are in real need and reduce the social security budget? Will my hon. Friend hammer the nail home once and for all and stress that that will improve race relations? The vast majority of bogus asylum seekers are now Europeans from the eastern bloc.

Miss Widdecombe: My hon. Friend is right on every count. Nothing in our Bill is intended in any way to disadvantage the genuine asylum seeker. Britain has a proud record of looking after those in need of a place of safety, and we shall continue to maintain that record.
The Opposition have consistently accused us of introducing a racist measure. That sits ill with what was said by their spokesman, the hon. Member for Leicester, East (Mr. Vaz). Before Opposition Members accuse us of racism, perhaps they will apologise for their spokesman.

Sir Michael Neubert: Did my hon. Friend read the story, earlier this week, of a man from Zaire on benefit who defrauded the British people of £1 million while awaiting a decision on his application for asylum? Does that not make our right hon. and learned Friend the Home Secretary's action on asylum applications and illegal immigration very welcome? Would not any political party that failed to support such measures—Labour, Liberal or Monster Raving Loony—be absolutely barmy?

Miss Widdecombe: That is perfectly true. Moreover, only the Conservative party is prepared to tackle the problem. Indeed, the Opposition have not made up their minds whether to acknowledge that there is a serious problem. They say that, even if there is a problem, we should not get round to tackling it. It is true that our asylum procedures are heavily abused. It is also true that our social security system acts as a magnet for the unworthy, as does the ease with which people can work illegally in this country. We shall support British taxpayers, no matter what their ethnic origin. We shall ensure that those who are here lawfully are not taken for a ride by those who abuse our system.

Mr. Timms: I welcome the assurance given by the Home Secretary last week that Nigeria is not now being considered for inclusion on the white list. Will the Minister now put the minds of many people at rest by giving a similar assurance in respect of Sri Lanka, where many thousands of people have been forced to flee their homes in recent weeks because of the civil war?

Miss Widdecombe: We have made it very clear that, at an early stage of consideration of the Bill, we shall give an indication of our thinking on which countries should be designated. I am not willing to anticipate that announcement, and the hon. Gentleman must possess himself in patience.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Nigel Griffiths: To ask the Prime Minister if he will list his official engagements for Thursday 30 November. [1381]

The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had

meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Griffiths: Why is the Prime Minister undermining the Post Office price freeze by increasing tax on the post, taking £1 million every working day and forcing up the price of stamps? Is not this yet another case of higher Tory taxes and the Government giving with one hand and taking away with the other?

The Prime Minister: I can see that the hon. Gentleman was very carefully rehearsed for this week's soundbite. He should look at the record on the Post Office. If he does, he will see that stamp prices have been frozen for some time and that it is two and a half years since the last increase. That is the longest period of stability since the 1960s, and stamp prices continue to fall in real terms.

Mr. Mark Robinson: Does my right hon. Friend agree that the extra resources for schools announced in the Budget are very good news? Will he also do everything in his power to encourage local authorities to ensure that that money is passed on to schools?

The Prime Minister: My hon. Friend touches on two important points. The increase in resources to schools through the local authority budget will be welcome. It is also important that it is clear to parents and to schools that the money provided to the local authority settlement for education should go to education.

Mr. Blair: Before asking my question, may I tell the Prime Minister that, on Northern Ireland, we reiterate our congratulations to all involved in the peace process? The American President's visit to Northern Ireland today marks a moment of history in which we all rejoice. May I express the hope that these new and strong voices for peace can drown out the old cries of violence and allow everybody, not just there but here, to unite and put aside their differences and work for a common end?
I do not know whether the Prime Minister remembers the Budget, but may I ask him to withdraw the remarks made by the Conservative party chairman, who has claimed that the Budget will make the average family in Britain £9 a week better off? Will he confirm that, of that £9, almost £7 has nothing to do with the Budget but has to do with the Conservatives' projection of wage increases next year? The real Budget figure is just over £2, and that does not take account of extra costs, charges and taxes. Is that right or wrong?

The Prime Minister: I welcome what the right hon. Gentleman had to say about Northern Ireland. The President's visit to Belfast this morning was a spectacular success and everyone welcomes what he has had to say about terrorism.
On the subject of withdrawing claims, the right hon. Gentleman, when he replied to the Budget statement, made a series of comments, the vast majority of which were specious, wrong or misleading. If he cares to examine them, he will find that those that were not wrong were misleading, and that those that were not misleading were wrong. My right hon. Friend said that people will be better off by £450 next year, and that is our expectation.

Mr. Blair: We are entitled to an answer on this point. The claim was made that people are £9 a week better off as a result of the Budget, but £7 of it comes from earnings


rises next year as projected by the Conservative party. The true Budget figure is just over £2, and that is confirmed by the Treasury press release. Is that right or wrong? If it is right, does not it show how the Tories give with one hand and take with the other—[HON. MEMBERS: "Hear, hear."] They do not like it because it is true. If it is true, does not it also show that we can never trust the Tories on tax?

The Prime Minister: It really is a rich day for the soundbites. After all that they have said about the Budget, it is interesting to hear that the Opposition will not vote against the Budget provisions. They cannot say yes and they will not say no; they have at best a qualified "maybe" about the Budget. My right hon. Friend said that, next year, the average family will be around £9 a week better off and that is our expectation.
Returning to the issues of taxes and trust, does the right hon. Gentleman recall saying that he did not propose to put up taxes? Does he recall the deputy leader of the Labour party saying:
high income levels are going to pay considerably more
and that there would be a higher top rate of tax under Labour? There seems to be some difference of opinion between the right hon. Gentleman and his deputy. It does not matter if the deputy goes on shouting at me. It would be better if he stuck to the party line instead of behaving like the mouth of the Humber.

Mr. Blair: I shall tell the Prime Minister what people will recall at the next election. He went into the election saying that he would never raise VAT, and he raised it. [Interruption.] They can shout, but they will never again be trusted.

Madam Speaker: Order. I insist on the Leader of the Opposition being heard.

Mr. Blair: They want a question. Is it not the case that the Prime Minister went into the election promising not to raise VAT and then raised it? Is that simple enough for them?

The Prime Minister: I can tell the right hon. Gentleman what people will remember at the next election. They will remember a 33 per cent. rate of tax under a Labour Government and a 24 per cent. rate now. They will notice that interest rates have come down by 8 per cent. and that net disposable income is rising—and they will recall that that is not what happens under Labour Governments.

Mr. Cash: Given the fundamental importance of NATO to Britain and western security and the fact that we are about to send 13,000 British troops to Bosnia, will my right hon. Friend consider vetoing the prospective appointment of Mr. Solana, the Spanish Foreign Minister, as Secretary-General of NATO as he has expressed views against NATO and nuclear deterrence?

The Prime Minister: I understand from the information that I have received that that most certainly is not Mr. Solana's view. I do not know what he may have said in the past and my hon. Friend may have seen

quotations of which I am not aware, but it is my understanding that that is not his view on NATO or nuclear weapons.

Mrs. Anne Campbell: To ask the Prime Minister if he will list his official engagements for Thursday 30 November. [1382]

The Prime Minister: I refer the hon. Lady to the reply I gave some moments ago.

Mrs. Campbell: Will the Prime Minister unreservedly condemn the callous actions of Tory-controlled Westminster city council in moving 100 families with 150 babies and children into tower blocks riddled with the most virulent and dangerous form of asbestos? Are there any depths to which his party will not sink in order to hang on to political power?

The Prime Minister: On the subject of depths, the hon. Lady might address her question to the Monklands, Lambeth or Walsall councils, or to any one of many other Labour-controlled councils whose activity in local government is a disgrace.

Sir Fergus Montgomery: Did my right hon. Friend read in the Sunday Express the article about the strange goings-on in the Sedgefield constituency, where the Hurworth comprehensive school is applying for grant-maintained status? Is he aware that the Labour party there is accused of campaigning on dirty tricks and misleading information to stop the Leader of the Opposition being embarrassed? If my right hon. Friend had a son at a grant-maintained school, would he feel that his constituents were entitled to the same opportunity?

The Prime Minister: I did not read the article, but if what my hon. Friend said is correct, I am sure that the Opposition would wish to examine the matter, investigate it, condemn what has happened and ensure that such campaigning ceased immediately. Of course people have a right to a ballot on grant-maintained schools. They have a right also to have that ballot without undue hindrance, either from the local authority or from Labour Members. I very much hope that they will have that right.

Mr. Madden: To ask the Prime Minister if he will list his official engagements for Thursday 30 November. [1383]

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Madden: As the Prime Minister is aware of the importance of prisoners in building still further confidence in the Irish peace process, will he support the early transfer, on humanitarian grounds, of Patrick Kelly and Michael O'Brien to prisons in Northern Ireland, and the repatriation of Irish prisoners to prisons in the Irish Republic—I hope before Christmas?

The Prime Minister: I think that the hon. Gentleman knows that there is the question of the health of one of those prisoners. They have both been convicted, as he knows, of serious terrorist offences. One of the solicitors involved has submitted medical evidence in support of a transfer. That matter, under the normal procedures, is being examined.

Mr. Deva: Will my right hon. Friend confirm that, if a member of his Front Bench had made a statement such as


was made last night by the hon. Member for Leicester, East (Mr. Vaz) in a public television programme, he would have fired him instantly?

The Prime Minister: I regret any remark that has any connotation of the sort that I believe lies behind my hon. Friend's question. I hope that it is a matter that the hon. Member for Leicester, East (Mr. Vaz) will clear up.

Mr. Mudie: To ask the Prime Minister if he will list his official engagements for Thursday 30 November. [1384]

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Mudie: The Prime Minister will be aware that many Yorkshire households are still facing the prospect of using standpipes and that many businesses are facing rotational water supply cuts. Given the obscene profits that were announced yesterday, will the Prime Minister join me and the people of Yorkshire in condemning the directors of Yorkshire Water both for their greed and for their incompetence?

The Prime Minister: I am pleased to tell the hon. Gentleman that I understand that Yorkshire Water plans to invest £2.5 billion over the next 10 years and that it will invest more than £200 million this year for its customers' benefit. I believe that that is double its half-year profits. I hope that that will go a long way to ensuring that the difficulties that have occurred after years of a nationalised water industry will not be repeated under private ownership.

Mr. Sims: To ask the Prime Minister if he will list his official engagements for Thursday 30 November. [1385]

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Sims: Is my right hon. Friend aware that thousands of pensioners will welcome the new 20p rate of tax on savings? Is it not clear proof that the Government are working towards a 20 per cent. basic rate, as distinct from the policies that the Labour party is espousing, which mean that it is heading for a 30p rate?

The Prime Minister: Given the demands for extra spending that come from Labour Back-Bench Members, there is no doubt that a 30p rate might be exceeded were there ever to be a Labour Government. My hon. Friend is right; the 20p rate is particularly good news for thousands of people with savings, especially, perhaps, for many hundreds of thousands of pensioners with savings.
I think that it was the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) who said a few days ago, when talking about Labour policy, that these days it amounts to little more than a marketing exercise. We saw that with the gimmick of a lop tax rate for the allegedly lower-paid. The reality is that we are proceeding towards a lower tax rate of 20 per cent. whereas the Labour party's spending plans add up to substantially more than the current level of taxation, whatever it may care to claim about them.

Mr. Janner: Would the Prime Minister be good enough to look at the awful case of my constituent, Jasmine Sorabjee, aged three and a half, born in this country and ill, whom the Home Office has seen fit to deport to Kenya with her mother? Is not that a cruel, disgraceful decision, devoid of compassion that shows the disgraceful way in which the Government are abusing immigration rules and failing to exercise any compassionate concern in cases of real human suffering?

The Prime Minister: I think that the hon. and learned Gentleman knows that the Government are not bypassing any of the immigration regulations. He knows that that is the case and he really should not have indicated the contrary. There are strict ways in which these matters are examined. They are examined with compassion.

Mr. Janner: They are not.

The Prime Minister: They are examined with compassion. Without any shadow of doubt they are examined with compassion. I have no details of the particular case, but the person removed from this country would have been the parent who, presumably, was an illegal immigrant.

Local Government Finance

The Secretary of State for the Environment (Mr. John Gummer): With permission, Madam Speaker, I should like to make a statement about the local authority finance settlement for England for 1996–97.
In forming my proposals, I have listened carefully to the views of local authorities and their associations, and I have considered fully the demands which will be placed on local authorities in the coming year.
I have also given weight to the interests of the economy as a whole, and in particular the Government's objective of reducing the public sector deficit. Local government accounts for around a quarter of general Government expenditure and has been rigorously examined, as have all other spending programmes. It is clear that many authorities continue to have scope to increase their efficiency.
I have also taken into account our policy that increases in pay and prices within the public sector must be offset, or more than offset, through efficiency savings or other economies. Within available resources, our approach to public sector pay is flexible enough to allow pay to be set to reflect the circumstances of individual groups.
That is the background to the aggregate figures that I published on 28 November. The Government's view is that the appropriate level of revenue spending for local authorities in England—the total standard spending or TSS—in 1996–97 will be £44.92 billion.
My right hon. Friend the Secretary of State for Health will be making a separate announcement on resources for community care, which are included in the figures that I have just quoted. The figures also reflect the transfer of waste regulation to the Environment Agency from 1 April 1996 and certain other minor changes in local authorities' functions next year, and include provision of £100 million for the transitional costs of local government reorganisation.
The figures do not include resources to compensate local authorities for lost income from community care charges, arising from capital disregard changes announced by my right hon. and learned Friend the Chancellor of the Exchequer on Tuesday. A special grant report will be laid before the House in due course to authorise an additional grant in 1996–97 for that purpose.
My proposal, including provision for community care, reorganisation costs and the police, provides for a 3.3 per cent. increase in local authority spending year on year. In allocating these resources, we have reduced provision for capital financing to bring it more into line with authorities' need to spend.
The Government have to decide what local government expenditure the nation can afford, because the national taxpayer foots most of the bill. Last year, we decided on £43.5 billion. This year, it is £44.9 billion. Of course, every year some local authorities spend more than under this system. They have their own resources: council tax, interest, fees and charges. So every year, on top of what the Government allow for, they budget to spend more. That is what we all expect. However, every year they use that difference to try to confuse the electorate. They take this year's spending, which includes all their resources, and compare it with the Government's settlement, which,

of course, excludes much of their resources. As a result, even though the Government provide for them to spend £1.4 billion more, they claim it as a cut.
I dwelt on that, because the confusion reaches even as far as the House of Commons. It is very important that at least we start by getting the facts straight.
I am comparing—[Interruption.] I am pleased that Labour Members think that, because it will be the first time—for any settlement under the Government—that they have bothered to think about the facts at all. I have to tell the House that the Labour party circulated a note before the Budget statement, saying that, whatever the settlement was, Labour Members had to say that it was inadequate. That shows how interested the Labour party is in the facts.
I am comparing the Government's settlement for last year with that for this year. Last year, local authorities spent more than the settlement, and they will do exactly the same this year.
As for local authority services, we have decided to give the main priority to education. My proposal is that, after adjusting for changes in function, education standard spending should increase by 4.5 per cent. I must emphasise that the amount spent on schools is a decision for the local authority concerned, but no doubt parents, governors and teachers will wish to ensure that the whole of that increased funding feeds through into school budgets.
The provision that I have announced for the transitional costs of local government reorganisation in 1996–97 will need to cover both a further tranche of transitional costs in the areas where reorganisation takes place on 1 April next year, as well as costs where reorganisation is not due to take place until April 1997. Orders have not yet been placed before Parliament to implement all the changes that the Local Government Commission recommended as part of its main county reviews. In addition, we must await the commission's final recommendations on the fresh district reviews; these are due later this year. We envisage a staging of the implementation of reorganisation in England which takes account of the resources available.
Central Government grant and the distributable amount of non-domestic rates in support of TSS will be £35.62 billion, a year-on-year increase of 2.8 per cent. I announced on 28 November that the distributable amount of non-domestic rates in 1996–97 should be £12.74 billion, and I am today publishing the detailed basis for the distribution. I propose that the revenue support grant for distribution should be £18 billion. In addition, some £4.88 billion of specific and special grants would be available. The total of revenue support grant for England, on which I am consulting, may need to be altered slightly if the balance of the police funding formula as between Welsh and English police authorities changes as a result of consultation.
I turn now to the means of distributing revenue support grant. At its heart is the standard spending assessment for each authority.
Standard spending assessments are never likely to be popular, but they must be fair. More SSA for one authority means less for everyone else, because the total is fixed. We are continually discussing with the local authority associations how the SSAs might be improved. I am sure that it would be helpful to the House if the Labour party also discussed that with the local authority associations. They certainly think that they are fair, even


though the counties would like more for the counties and the metropolitan authorities would like more for the metropolitan authorities. It is very difficult, when one has an objective system, that the only people who do not think that it is objective are the official Opposition—in this House, but not outside. We share with the local authority associations all the detailed data and analyses that might form the basis of changing the SSA formulae.
The system is as open and objective as we can make it. Those who claim otherwise simply do not understand the SSA system. The formulae we use are not applied selectively to achieve a particular result for a particular authority—[Laughter.] If Opposition Members wish to press me, I will give them figures that will be very embarrassing to them. I shall be happy to show that the authorities about which they complain got more proportionately under Labour Governments than under Conservative Governments—[HON. MEMBERS: "Westminster."]—and one of them is the very authority they mention.
For each local authority service, the same formula is used for every authority that provides that service. If the formula specifies £2,000 per pupil or per kilometre of road, that is what the authority's SSA is.
All the local authority associations understand the need for a SSA system. The differences between them are about the indicators that they believe are important and the ways in which they should be weighted. We have no choice but to assess the strengths of the conflicting arguments when deciding what changes to make.
For 1996–97, we have brought up to date the data on SSA indicators, such as population and pupil numbers, wherever that is possible. It is right that we should reflect changing circumstances.
We propose only limited changes in the method by which we calculate SSAs. Authorities will generally welcome relative stability in their SSAs. We have, therefore, made changes only where we were satisfied that there is a sufficiently strong case for doing so. Most of the changes have been the subject of representations from authorities. The arguments for and against change have been discussed at length with the local authority associations.
There are, therefore, six main changes. We have responded to suggestions that the allowance for special educational needs and support services should be based on the number of pupils attending maintained schools, rather than the total number of children living in an area.
We have responded to requests that we make distinct provision for local authorities' contributions to the cost of rent allowances, over which they have limited discretion. We have also responded to those who wish a distinct element of the SSA to be allocated to authorities that pay the levies of the national parks and the Broads.
We have responded to those who believe that a larger proportion of the SSA for the police should be related to the cost of pensions and a lesser proportion to the police establishment.
We have followed up the Audit Commission's report entitled, "In the Line of Fire", introducing a distinct element in the formula relating to pensions and a new element relating to the work of the fire service on fire prevention and fire safety. And we have brought up to date the basis on which we allow for district councils providing some county council services and vice versa.
One controversial part of the formula in which we have retained the existing methodology is the area cost adjustment. We have agreed with the local authority associations that we will set up an independent review, which will report in June 1996. The aim will be to identify a way of calculating the area cost adjustment that is conceptually sound, achieves a wide measure of acceptance among local authorities in all parts of the country and is practical to apply, year by year.
Meanwhile, the area cost adjustment for 1996–97 will reflect the narrowing of differentials in earnings between London and the south-east and the rest of the country. Compared with the adjustment made for 1995–96, SSAs in London and the south-east will be more than £150 million lower, and those in other parts of the country higher by a similar amount, through using the more recent figures on earnings.
I therefore propose that authorities should receive a special grant to damp the effects on council tax of changes in the method of calculating SSAs. I stress that that applies only to changes in the method. Changes in data have their full effect, without being moderated through damping, as is our usual practice.
That means that the change in the area cost adjustment, which I have just mentioned, comes through in full because it arises from changes in the data on earnings. That is even-handed; when the earnings data were changing in a way that was favourable for London and the south-east, London received the full benefit without damping.
The damping grant will operate at a threshold of 2 per cent., taking account both of the change in the SSA and of any damping grant being paid in the previous year as a result of earlier changes in SSAs. In the case of police authorities, the damping arrangements will also take account of the police grant. I know that that will be widely welcomed.
The council tax is now well established as an equitable means whereby local residents contribute to the cost of local services. Council taxes will vary widely, depending on the spending decisions of each local authority and its performance in collecting the tax, on the circumstances of each household, and on individual entitlement to exemptions or benefits.
However, I am required to identify notional taxes for each valuation band, for a standard level of spending—the so-called council tax for standard spending, or CTSS. My proposals incorporate a CTSS for band C of £505. I emphasise to the House that that is merely an element in the grant distribution formula. It is neither a prediction of individual council tax bills nor a national average.
I believe that we have now fully met our commitment to help those facing the largest increases above their community charge bills when the council tax was introduced. I therefore do not propose to continue the scheme of transitional relief in 1996–97. However, I do propose a scheme to protect council tax payers in areas to be reorganised from 1 April 1996 from unacceptably large increases in council tax if those are a direct consequence of reorganisation.
Local authorities need to make a full contribution to the control of public expenditure and to set budgets that their local taxpayers, and the country as a whole, can afford. I am today announcing my intentions for capping criteria.
First, however, I shall draw attention to a technical change in the capping rules. Billing authorities have until now been required to include in their budget requirement, on which capping bites, a proportion of the income forgone in granting certain discretionary non-domestic rate reliefs. I propose to remove those reliefs from the scope of capping. I am sure that billing authorities will welcome that change. Decisions on the granting of relief are entirely for them, but I hope that the change will encourage greater consistency of policy in that area—for example, towards village shops suffering financial difficulties.
I am issuing today proposed notional amounts for authorities whose boundaries or functions will change from 1 April 1996, including the reorganised authorities in Avon, Cleveland, Humberside and North Yorkshire.
In addition, the provisional capping principles make allowance for a number of changes since last year, such as in the funding of rail services in metropolitan areas. That is necessary to allow a fair year-on-year comparison of budgets. Subject to those and other technical adjustments affecting individual authorities, my proposals for capping criteria are as follows.
As in previous years, when authorities set budgets 12.5 per cent. or more above their SSAs, the proposed criteria will not permit any increase over their 1995–96 base budget. However, I do not intend to seek reductions from the few remaining authorities that set budgets substantially above their SSAs.
In this year's settlement we have given priority to the police, to education, to personal social services, including care in the community and to the fire service. I propose to reflect these priorities in changes that I am introducing into the capping system; changes which will allow those authorities that are local education authorities, police, or fire and civil defence authorities, a greater measure of flexibility.
County councils and the Isles of Scilly, new unitary authorities, metropolitan districts, London boroughs, police and metropolitan fire and civil defence authorities will benefit from the new approach. For authorities budgeting up to 12.5 per cent. above their SSA, there will be two capping criteria. The increase in their budgets will be limited to whichever gives the greater increase.
Under the first criterion, the increase in an authority's budget will be limited to an amount calculated by adding together the increases compared with 1995–96 in the authority's SSAs for education, for personal social services, for fire and—in the case of police authorities—the increase in their police SSA and their principal formula police grant. The second criterion will limit an authority to a flat-rate year-on-year increase compared with its 1995–96 base budget.
The second criterion will give permitted increases as follows—for county councils and the new unitary authorities in Avon, Cleveland, Humberside, York, and the Isle of Wight, and for the Isles of Scilly, I propose that the year-on-year increase should be limited to 3 per cent. For metropolitan districts, outer London boroughs and the London and metropolitan fire and civil defence authorities, I propose that the increase should be limited to 2 per cent. For inner London boroughs and the City of

London, I propose that the increase should be limited to 1.5 per cent. For police authorities, I propose that the increase should be limited to 3.5 per cent. These percentages will be used if higher than the figures arrived at by adding relevant SSA increases, as I explained earlier.
For shire districts, I propose that the criterion should be the same as last year. That is, any increase of 0.5 per cent. over last year will be considered excessive if it gives a budget requirement above an authority's SSA. These criteria are necessarily provisional, and I cannot take my decisions on capping until authorities have set their budgets. When I come to take those decisions, I shall of course take into account all relevant considerations.
The new approach that I have outlined will allow individual authorities greater flexibility to adapt their budgets to local circumstances. Authorities have repeatedly said that they would use such flexibility in a responsible way, and would not take this as a licence for a general increase in spending and taxes. The Government, and council tax payers, will watch with interest how authorities respond to the greater responsibility that this places upon them. We shall see where their true instincts lie.
Alongside this new approach to capping, the Government are also proposing an expansion of challenge funding in local authorities' capital programmes. Challenge funding is one of the greatest successes of this Government. Earlier this week, the Environment Select Committee reported that the single regeneration budget challenge fund has already demonstrated its potential to achieve excellent value for taxpayers' money. The SRB challenge fund supports the regeneration of cities, towns and smaller communities throughout England. It is also and increasingly promoting genuine community and private sector involvement, integration of different Government programmes and a new sense of partnership between local authorities, training and enterprise councils and others.
The challenge fund is therefore a proven concept, demonstrated by a substantial programme which is making a very noticeable impact. We are already building on it by applying the challenge approach to the housing investment programme and other initiatives, including the new deprived estates challenge fund.
The Government have been enormously encouraged by the imaginative and constructive way in which local authorities have so far seized the opportunities the fund presents. They have found that challenge funding stimulates a new approach to priority setting. Separate service departments come together to co-ordinate an approach which best suits the authority as a whole. The contributions levered in from the private sector enable them to increase the total spend to the benefit of local people, businesses and competitiveness.
We believe that we should build on that progress, and pilot approaches which would accelerate the drive towards challenge funding beyond the relatively small proportion of public spending to which it applies at present. I will therefore publish a discussion document shortly, which will set out options for a pilot scheme for introducing challenge funding for an element of local authority capital programmes. I want to hear from those with further experience of the benefits of challenge funding, and I hope that we will be able to move forward very quickly.
My Department is today writing with the details of the settlement to every local authority in England. That package includes a consultation paper setting out how we propose to distribute central Government support among authorities, including my proposals on SSAs, for continuing to damp SSA losses and for the police authorities. It sets out my provisional capping criteria, illustrates them by calculations of the proposed cap for each authority and includes my proposals for notional amounts. Copies of this package have been placed in the Vote Office and the Library.
The proposals that I have outlined today represent a balanced and reasonable response to the conflict between the pressure to provide ever more resources for local government and the need to control public spending. They provide for a 3.3 per cent. increase in local authority spending, including police and the transitional costs of reorganisation. They incorporate significant improvements in how available resources are allocated, while continuing to protect people in those authorities that stand to lose most from changes in SSA methodology. They would allow council taxes next year to be set at reasonable levels, offering protection from excessive bills. They represent a package which the country as a whole can afford.

Mr. Frank Dobson: Today's statement shows that the Government are determined to force local councils to increase council tax and reduce the services that they provide for local people. Next year, as this year, local people will have to pay more and get less. [Interruption.] Madam Speaker, we kept quiet for 25 minutes. It would not be a bad idea if Conservative Members could keep quiet for five.

Madam Speaker: The hon. Gentleman makes a good point. He will be heard in good order.

Mr. Dobson: On the basis of the Government's figures, council taxes could rise by as much as this year's average increase of 5.2 per cent. That council tax increase, combined with higher charges for local services like school meals, meals on wheels and home helps, and the cost of service reductions, will cost an average household £108 next year.
The Government's figures also show that they expect council tax payers to cough up an extra £3.5 billion over the next three years, which is about equal to an extra tuppence on the standard rate of income tax. That is just another example of the Government furtively taking away with one hand the highly publicised cuts that they have been making with the other.
The Secretary of State and the Prime Minister today, like the Chancellor of the Exchequer on Tuesday, claimed that the Government will provide more money for education next year. That is simply not true. According to their own figures, councils will spend less on education next year than they are spending on it this year. An extra 86,000 children will be at school next year. It they are taken into account and councils fall into line with the Government's published spending plans, the amount spent per pupil next year in our schools, far from rising, will fall by £40 per pupil.
Let us compare the Government's world of fantasy finance with what is happening in the real world. In the real world, there are more schoolchildren; hard-working schoolteachers expect a pay increase next year; inflation

drives up the price of books and other school equipment; and councils or schools will have to meet the extra costs of measures like installing seat belts in school coaches.
A landfill tax will be levied on councils, costing them £77 million next year. That is a straight transfer from council tax payers to the Treasury. This morning the Secretary of State said on the radio that councils could save more money by putting services out to tender. As he well knew when he said it, councils are already obliged by law to put their services out to tender and, if a contract does not go to the Tories' friends in the private sector, it can be only because a council's own work force put in a lower and better bid. He also suggested that councils can increase charges to help keep up their current level of spending. Which charges does he want to see increased? Does he want parents to have to pay more for school dinners or pensioners to pay more for meals on wheels or home helps?
This mean-minded settlement will increase council taxes, push up charges for vital local services and cut those services for local people. It means that next year, like this year, the Government will force local people to pay more and get less.

Mr. Gummer: The hon. Gentleman is saying, on the one hand, that the settlement is inadequate and on the other that we are putting taxes up to pay for it. The curious thing is that those two ideas do not hang together. How much would he think was adequate? How much more tax would a Labour Government impose to pay for an adequate settlement? They cannot have it both ways. He wants more money without anybody paying it. That is the traditional Labour attitude.
When the hon. Gentleman works out how much the council tax, as he says, will go up, he is saying that every Labour council will put up its tax to the highest level that it can manage within TSS and therefore take that tax off its local taxpayers. In other words, he is proving what we have always said: that Labour councils tax people more, and that immediately they are given the chance to tax more, they take that chance. Yet what did the local authority associations, which are all run by the Labour party, say? They said that if we gave them more freedom they would deal with it responsibly, but Sir Jeremy Beecham has now told us that they will use every corner of that freedom to put up the council tax by 10 per cent.
Already the Labour party has halved that increase to 5 per cent. because it does not accord with the Blair rule, which was circulated around the Opposition Front Bench and was very clear. First, before the Budget was announced, Labour Members had to say that any settlement, whatever it was, was inadequate. Secondly, they could not promise any more money.
The questions of the hon. Member for Holborn and St. Pancras (Mr. Dobson) beg the question: how can people have more money to spend without any increase in taxation? The answer is that one cannot spend money one does not have. It is a simple answer, but it is one that Labour—new, old or indifferent—has never learned. We have heard today that the Labour party has not learned anything. Wherever it is in power, it intends to spend right up to the limit that it is allowed.
The hon. Member for Holborn and St. Pancras went on to say that it was fantasy finance. How interesting. The hon. Gentleman was comparing what councils are


spending this year with what their allowance from the Government is for next year instead of comparing like with like.

Mr. Dobson: That is not true.

Mr. Gummer: The hon. Gentleman did. I suggest that he looks at Hansard to see it. He knows that councils will have 4.5 per cent. more, on average, to spend on education and if that money does not get through to the schools, it will be the Labour and Liberal councils that have stopped it. The Government have given 4.5 per cent. to the schools. The only people who can stop it getting there are the Labour party and its local councils.
Lastly, we will be watching carefully the argument about going out to tender. The metropolitan authorities have gone out to tender and in well over 80 per cent. of cases, the in-house team has won but in the shire districts, only 40 per cent. of in-house teams have won. Does that mean that Labour in-house teams in metropolitan authorities are much more efficient than Labour in-house teams in shire districts or does it mean that it is almost impossible to win a contract in a Labour metropolitan district because the local council trade unionists make sure that they are the paymasters and that those local authorities therefore pay them with the council tax payers' money?

Sir David Madel: My right hon. Friend will be aware of the difficulty that Bedfordshire county council has had this year in relation to its school budgets. Can he confirm that his announcement will make it perfectly possible for Bedfordshire county council to put more money into school budgets in Bedfordshire next year?

Mr. Gummer: My hon. Friend is perfectly right. If Bedfordshire county council does not increase significantly the money going to its schools—it has a permitted budget increase of 3 per cent., and more in terms of its education budget—it will be because the council has pinched the money to spend on something it wants more.

Mr. David Rendel: Will the Secretary of State confirm that if there is to be extra real spending by local councils next year in education and other spheres, which he has tried to pretend there ought to be, that money will have to come from an increase in council tax? According to the Department of the Environment's own figures, which were contained in a press release issued on Tuesday, the Government's central subsidy to local councils will be precisely the same in real terms next year as it is this year. There are no extra real resources from the Government. Moreover, is it not the case that a large proportion of the extra resources come from business rates, which are simply a transfer from businesses to the local community, while the amount coming from other taxation is actually falling considerably?

Mr. Gummer: First, it would be more helpful if the hon. Gentleman, when looking at the Red Book, could distinguish between British figures and English figures; otherwise we do not get the comparison right. His comparison is wrong. Secondly, I do not know whether the hon. Gentleman has run a business, but most business men do not start off by saying that the only way to save

money is by getting more. They start by asking themselves whether they can be more efficient and then use the money that they save. The Labour party and its annexes, the Liberals, have said the same thing: that the only way that we can find the money is to increase council tax. Sir Jeremy Beecham, who is of course supported on this matter by the Liberals, today let the cat out of the bag. He said that Labour and Liberal councils will spend every penny that the Government allow them to spend. Whether they need it or not, the council tax will increase by 10 per cent., and it will be a Labour and Liberal increase.

Sir Timothy Sainsbury: Will my right hon. Friend accept that the priority that he has given to education in the form of a 4.5 per cent. increase and the recognition of that in the capping formula will be very widely welcomed? Will he join me in condemning the irresponsible party political scaremongering in which East Sussex county council and a number of others led by Labour and the Liberal Democrats have indulged, frightening parents, teachers and governors by saying that their education budgets are going to be cut instead of increased?

Mr. Gummer: My right hon. Friend is perfectly right. His county council will have an increase of 3 per cent. It has been going around, as my county council has—it has been a nationally run operation—telling people that it would suffer a 5 per cent. cut. If I may use my own county council as an example, in Suffolk there will be an increase of 5.7 per cent. for education. The county council has been scaremongering and saying that there will be a cut of 5 per cent., which shows how the Opposition parties will use anything to try to get party political support.

Mr. Terry Davis: On the question of schools and the area cost adjustment, does the Secretary of State intend to continue the distribution of money on the basis that Birmingham should spend 20 per cent. less than Westminster on the education of a child?

Mr. Gummer: The area cost adjustment is something about which we argue with the local authorities. Of course, the hon. Gentleman could have used Tower Hamlets or any other inner London borough as an example because the position is the same for all the inner London boroughs and, indeed, the south-east in general. That is how the system works. There is a real argument between Labour, Conservative and Liberal authorities which get money from the area cost adjustment and the similar authorities which do not get the money. That is why, having tried with their help—they also tried, together and separately—we decided that the only way to proceed is to have an independent inquiry to see whether we can find a better method. But there is a fundamental difference: those who receive from the present system like it and those who do not receive do not like it. The trouble is that even the independent group will find that difficult to square.

Sir Dudley Smith: Is my right hon. Friend aware that the socialist and soggy Liberal councils will almost certainly say that that is not enough money? Does my right hon. Friend realise that anyone who studies the figures will welcome the 4.5 per cent. increase on the SSA for education? Will he encourage recalcitrant county councils such as Warwickshire to release more of their financial assets to


which they still cling on in difficult times? Will he tell such councils that they should live within the inflation figure like everyone else has to?

Mr. Gummer: My hon. Friend makes a good point. If local authorities wanted to help people on the basis of inflation—if they tried to push inflation down—which would help them in future years, they would seek to live at least within the inflation figure, if not try to make savings. In my hon. Friend's case—in Warwickshire—there is a permitted increase of budget of 3.2 per cent., which will feed through into education more significantly. The concerns that both he and my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) have pressed on me so often have been met this year by that change and will be met in the future by the agreement for an independent review of the area cost adjustment which, as my hon. Friend the Member for Warwick and Leamington (Sir D. Smith) has often told me, is particularly difficult for Warwickshire.

Mr. Nigel Spearing: The Secretary of State has made great play of local authorities' ability to pass on the money that he says is being provided for education, presumably by way of the SSA. Does he agree that the SSA does not provide the money, which comes through the revenue support grant? For the past few years, with the best will in the world, Newham has been unable to pay its SSA in education because £6 million had to be spent on the homeless and another large sum had to be spent in respect of capital receipts, which it is impossible to pay out of the revenue support grant provided by the Secretary of State. How can Newham, with an increase of 2.5 per cent. in permitted budget—compared with Westminster's permitted increase of 11 per cent. for next year—afford the increase in the figure for education?

Mr. Gummer: The answer is simple. Newham has been overspending right at the top of the level and Westminster has kept its costs low. According to the independent assessment published in the Independent only a few weeks ago—

Ms Hilary Armstrong: It is yours.

Mr. Gummer: It is an independent assessment and has nothing to do with me. According to that assessment, Westminster is the fourth most deprived borough in London. [Interruption.] I hope that the hon. Member for Holborn and St. Pancras will read the Independent newspaper to see where the statistic came from. That newspaper does not support, nor is it written by, my officials. The hon. Gentleman seems to want to discount those independent figures. Is he honestly saying that, in future, if there were ever a Labour Government, he would hand out money on the basis of his own—bottom—ideas? If he does that, he will be returning to the old Labour system which gave Westminster significantly more than the present system.

Mr. Barry Field: As my right hon. Friend has said that the review of district councils is nearly complete, will he promise the House that there will be an early review so that the people of East Cowes can have the parish council to which they have been looking forward? Is he aware that the Liberal Democrat-controlled Isle of Wight council published a leaflet only last week, on the front of which it said that there would be

£630 million of Government cuts to local authorities? Will he condemn that and ensure that the money is used for education on the Isle of Wight? We had had an excellent budgetary record on the Isle of Wight—we drive round in our 25-year-old cars and are all over the age of 60—and we now have a local government settlement specifically for the Isle of Wight. I want the good news to get through to the people, not to be gerrymandered and tinkered about with by the wretched Liberal Democrats who want to spend the money, waste it and do anything with it but provide a decent education for the people of the Isle of Wight.

Mr. Gummer: The people of the Isle of Wight have a very good advocate in my hon. Friend. It is a great sadness that they have a Liberal county council, because that county council will, no doubt, having promised the people cuts, want to deliver on that Liberal promise. It will be the only promise that the Liberals ever made that they will deliver on, but that is the one that they will want to deliver on.
I hope that my hon. Friend and local governors and teachers will insist that the Liberal county council on the Isle of Wight passes back money that has been given to it by the Government from the taxpayers, to every school in the Isle of Wight. I am sure that my hon. Friend will ensure that we soon know if it does not.

Mr. Harry Cohen: Will the Secretary of State comment on the proposal to withdraw large amounts from the SSAs for the operation of the nursery voucher system? Are not the proposals that the Government are considering unfair, in that the withdrawals from SSAs would be on a per pupil basis, whereas the SSA is allocated on a needs basis? Will not that lead to those authorities with relatively little nursery provision having large amounts of SSA and those with a large nursery provision having very little SSA—perhaps even a negative SSA?

Mr. Gummer: Perhaps the hon. Gentleman has not noticed that the only people to whom that applies are the four volunteer councils, which do not include his local council. He should not be worried at all.

Sir Patrick Cormack: In thanking my right hon. Friend for concentrating on education, may I ask him whether Staffordshire will have its very significant problems solved? May I also ask him whether he will try to make the whole business of local government finance a little more intelligible to the ordinary man? Is he aware that the doctrine of the Trinity and the Schleswig-Holstein question are positively kindergarten subjects by comparison with:
B+C+M-O+V, where B, C, M and 0 and V have the same meaning in subparagraph (1) above"?

Mr. Gummer: The matter is simple for my hon. Friend. His local council will be able to increase its budget by about 3.2 per cent. It should be able to get a significant amount of money through to the schools, and I am sure that he will ensure that it gets that money through to the schools. If the money does not go to the schools, it will be the Labour-controlled Staffordshire county council that will have failed.

Mr. John Heppell: Does the Secretary of State remember that last year, Nottinghamshire county council predicted a cut of £20 million and was told that it was scaremongering? In


the event, it had to make cuts of £22 million. This year, it predicts cuts of £50 million. Even if the council is completely wrong about that and it has to make cuts of only £25 million, it is not scaremongering: it will mean fewer teachers and larger classes.

Mr. Gummer: No, because there are no such cuts. The only way in which the council can produce those cuts is by deciding how much it would like to have spent in the best of all possible worlds, placing that figure before the public and then saying that it is not receiving that full amount and therefore the bit in between is called a cut. That council could ensure that its local schools had more money, and no doubt the hon. Gentleman will ensure that it does.

Sir Peter Emery: Will my right hon. Friend drive home the fact that this year, for education in Devon, there is an increase of more than £17 million—10 per cent. more than the average increase of 5.3 per cent.—and that that means that, on a rough calculation, there is more than about £140 per pupil in Devon extra for the Liberal county council to distribute to the schools instead of keeping it, as the council did last year, to distribute elsewhere? Will he therefore consider whether certain councils should have the SSA ring-fenced to ensure that they get the money to the schools rather than keeping it for the county?

Mr. Gummer: My right hon. Friend is right. He will notice that Liberal Members are busy trying to pretend that that money is not coming to them, because Liberals want to do again this year what they did last year, which was to starve the schools in order to blame the Government and to use the money for something else.
We know how the Liberals operate. They will no doubt try to operate in that way again this time, but, with a settlement of more than 5 per cent., as my right hon. Friend says, if that money does not get to every school in Devon, I am sure that he in his constituency and his colleagues in other constituencies will ensure that every parent and governor knows that the reason why the money has not got there is the Liberals at Devon county hall.

Mr. Peter L. Pike: Does the Secretary of State accept that increasing the standard spending assessment for education by 4.5 per cent. does not give local authorities a penny more because Lancashire county council, for example, is already spending 108 per cent. In fact, the right hon. Gentleman said in the early part of his statement that the real increase in local government expenditure was only 2.8 per cent. Is that not the crux of the issue?

Mr. Gummer: The hon. Gentleman must face the fact that Lancashire county council can increase its budget by 3.2 per cent. By concentrating on education, which represents a significant part of its budget, the council can significantly raise the amount spent on schools. The hon. Gentleman knows that; any attempt by him to suggest otherwise demonstrates that he is in league with Lancashire county council—one of the least satisfactory county councils in the country—in trying to excuse the fact that the council has not given the money to the

schools. We shall wait and see. If the council does not give the money to the schools, we shall know who to blame—and the hon. Gentleman will be one of them.

Mr. Nicholas Winterton: My right hon. Friend will be aware that I have frequently questioned Ministers on the Floor of the House about the allocation of resources to Cheshire—my constituency is in that county—especially in relation to personal social services and education. May I thank my right hon. Friend for the additional allowance of 5.1 per cent. for education—that is more than £17 million—and for the additional sum of £1.25 million for personal social services? I know that that will be welcomed by those who run Cheshire county council, and by my constituents.
Will my right hon. Friend clarify one point, however? The Minister of State has launched an inquiry into the area cost adjustment. When the committee or commission that conducts that inquiry has reported, will its recommendations be implemented without delay? If Cheshire is to benefit, will the adjustment be implemented retrospectively to cover the current year, or will it apply only to the next financial year?

Mr. Gummer: I thank my hon. Friend for his supportive words, but I should have known that there would be a sting in the tail. I fear that the adjustment will not be retrospective; but I promise that as soon as we have the report and are able to consider it, we shall seek to implement its recommendations as far as is possible, certainly in the next financial year. We are talking not about this year, but about the next settlement. This is the last settlement under the present system, given that the recommendations stand up and are different from the current arrangements.

Mr. Stephen Timms: Is it not rather misleading to concentrate on the increase in the education part of the revenue support grant? It is only one element in a larger single sum. What percentage change in the non-education element does the right hon. Gentleman propose?

Mr. Gummer: I hope that the hon. Gentleman has noticed that I have used the increase in the total budget in all the figures that I have given. Some hon. Members have referred to education, but I have given the total sum. I assure the hon. Gentleman that the increase in spending permitted in Newham will be more than 2 per cent.

Sir Michael Shersby: I am pleased to learn that Hillingdon's education SSA is to increase by £4,865,000, or 5.5 per cent., in the coming year. Can my right hon. Friend assure me that nothing in the capping arrangements which have existed in the past, and which have been revived this year, will prevent Hillingdon borough council from passing the money on, particularly to grant-maintained schools in my area?
May I also express my gratitude, on behalf of the Uxbridge police, for the element in the statement relating to pensions? That is a great improvement, which will he welcomed by the Uxbridge police.

Mr. Gummer: I thank my hon. Friend for his second point, and I can give him the assurance that he requires on the first.

Mr. Robert Ainsworth: Will the Secretary of State drop the smokescreen with which he


has been trying to obscure the facts, and answer a simple question? Given the same level of service next year as this, does not the settlement impose a 5.2 per cent. tax increase? Is this not another Tory hidden tax—and not very well hidden at that?

Mr. Gummer: Only if every council decides to spend to the full increase in the SSA and nobody makes any savings whatever. In other words, Labour councils will no doubt force this upon their electorates, but sensibly run councils can make savings and start there. The hon. Gentleman is right only if he assumes a badly run Labour council.

Mr. Tim Smith: Is my right hon. Friend aware that the extra resources that he has announced for education are extremely welcome? What can be done to ring-fence that money to ensure that it actually reaches the schools? Will my right hon. Friend ask the Secretary of State for Education and Employment to publish a list showing each school in each constituency and how much their budgets would increase if the SSA percentage were passed on to them?

Mr. Gummer: My right hon. Friend the Secretary of State for Education and Employment is here and will have heard my hon. Friend's comment. In his county, we will not have much difficulty in ensuring that the money goes to the schools, because he has a well-run council that seeks always to find savings in order to improve what it can do with education. Elsewhere, we will have to keep a beady eye on what happens.

Mr. Richard Burden: Does the Secretary of State accept that he cannot claim to be increasing the amount available for education when he is screwing down the overall level of support for local authorities in the way implied by his statement? Is he aware that every £1 million not allowed to Birmingham threatens 200,000 hours of home care; or four libraries and four community centres; or four elderly persons homes; or 100 places in special schools? Which would he cut—or would he put taxes up?

Mr. Gummer: The hon. Gentleman cannot have it both ways. On the one hand, he complains about the settlement by saying that unless we can make savings, we might have to increase council tax. On the other hand, he says that he wants to spend more. The hon. Gentleman must answer the question that Opposition Front Benchers have not answered: if there were a Labour Government, by how much more would they put up taxes in order to make the settlement what they would call adequate? They will not answer that question because they have been told to say both that the settlement is inadequate, and that they would not increase taxes in order to meet the inadequacy.

Mr. Tim Rathbone: May I add my thanks to those already extended by my right hon. Friend the Member for Hove (Sir T. Sainsbury) for the amount made available to East Sussex?
I wish to ask my right hon. Friend about manners in local government. How can he stop local government carrying on the sort of pseudo-consultation exercise that East Sussex county council has performed on the basis of an anticipated increase in education funding of 0.5 per cent., which was ludicrous months ago and has been proved absolutely ludicrous today?

Mr. Gummer: Although the rough and tumble of party politics is perfectly reasonable and most of us rather enjoy

it, I think it is intolerable to frighten parents about the future of their children and old people about their future in council homes. That is part and parcel of most Liberal party politics. The Liberal party is the only party that stoops so low, and I exclude the Labour party from that.

Mr. John Gunnell: The Secretary of State has recognised that the change in capital disregards for people in long-term care will have a substantial effect on finances in local government, as we will hear later. Can he guarantee that the disregards will be taken into account for the capping criteria; and that the funds will be adequate? If the funds are inadequate, the Secretary of State will be responsible for the impact on services. What steps has he taken to mitigate the impact?

Mr. Gummer: There have been full discussions on this matter. The announcement and details will be given very soon. I hope that the hon. Gentleman can contain himself till then. If he has further questions, I will be happy to meet him and discuss them.

Mr. David Wilshire: Is my right hon. Friend aware that Surrey county council has not waited for today's announcement and has been busy telling parents in my constituency that schools in Surrey are likely to receive £8 million less next year? Now that he has announced that the schools will receive £8 million more, how does he rate my chances of an apology from Liberal and Labour councillors?

Mr. Gummer: The chance of getting an apology is poor. Perhaps my hon. Friend should ask his Liberal and Labour opponents to use the same mechanism to circulate to every parent and every school the fact they are getting £8 million more. If they did that, they would not need to apologise, but they might have to explain to parents why they tried to mislead them in the first place.

Mr. Paddy Tipping: Will the Secretary of State consult parents about the settlement? What will he say to parents in Nottinghamshire when they bring to his attention the fact that the county council currently spends 7.5 per cent. or £25 million above the Government guideline on education? The county council will receive, at best, £15 million from the settlement, leaving a budget gap of £10 million. There will be bigger class sizes and fewer teachers, so people will be paying more and getting less. How will he respond to them?

Mr. Gummer: The hon. Gentleman has to say that 3.3 per cent. goes on in addition—it goes straight through. However, he should point out to the leader of his county council that Nottinghamshire is one of the most profligate counties in the country and could give a great deal more to schools if it stopped spending as wildly as it does now.

Mr. Iain Mills: Does my right hon. Friend recall our conversation in a similar debate last year, when he admitted that the methodology of the SSA calculation was unfair to Solihull council? Does he now believe that he has corrected that in his statement today?

Mr. Gummer: I am pleased that my hon. Friend reminds me of that occasion, which was not a comfortable one for me because I had real sympathy with Solihull. As he knows, I cannot change individual arrangements as they are made by classes. Solihull is one of a class and the arrangements last year had a particular effect on


Solihull. He will note that the budget can rise by 3 per cent. I have announced an independent inquiry into the way in which we deal with the area cost adjustment, which is particularly important to Solihull. I hope that when it comes through, my hon. Friend will be happier about the arrangements.

Several hon. Members: rose—

Madam Speaker: Order. Despite the fact that the statement has now taken more than a hour, I shall try to call all the Conservative Members who have been standing for so long. Perhaps we can have a reasonably quick exchange as there are two more statements.

Mr. Richard Alexander: Would it not be fraudulent of local authorities to use the money directly allocated for schools for some other purpose? Bearing in mind the fact that schools in Nottinghamshire were seriously underfunded last year, surely we should take steps to ensure that the money specifically allocated to schools goes to schools. It is not enough to say that it must be left to parents, governors and local Members of Parliament. We should take a closer interest in ensuring that the money goes to the right quarter.

Mr. Gummer: My right hon. Friend the Secretary of State for Education and Employment and I will certainly take a very close interest, but there is a difficulty. If one believes in local accountability, local councils must make such decisions for themselves. When I refer to governors, parents and local Members of Parliament, I am talking about local accountability. We have told people quite clearly that they can spend significantly more money on schools. Nottinghamshire can save money in many other ways and spend it on schools, but Nottinghamshire taxpayers will have to press to make sure that the money gets through to the schools. If my hon. Friend knows of any case in which they are not doing so, I shall look at it myself.

Mr. Nigel Forman: Although I warmly welcome the increase of the education SSA by 4.5 per cent. this year, which is generous, has it ever crossed the mind of my right hon. Friend when he was Minister for Local Government or now, as Secretary of State, that the two main weaknesses of the system that we are discussing are its excessive complexity and centralisation? Is it not time that the Government took a long, hard look at those aspects, particularly if my right hon. Friend is sincere—as I presume him to be—in saying that he favours local accountability? Is not the real answer to give local authorities more possibility to take their own spending decisions and then to be held directly to account by their local electorates?

Mr. Gummer: I have great sympathy with what my hon. Friend says, but there are two problems. First, if local authorities are spending a quarter of the spending of government as a whole, it must have an effect on the ability of national Government to spend. If local authorities were to push up spending, we, national Government, would have to reduce our spending on the national health service, for example, to keep the general economy in shape. There is a real difficulty.
Secondly, money does not necessarily come easily from a local community in the sense that the poorest communities may have the greatest needs but the lowest

rate bases. We need a system that provides a real redistribution of income, which is what the SSA does. There will always be a significant amount of central Government spending, over which we need to have some control. A modest movement, however, in the direction of more money coming from the local community, would be reasonable. In that context I have gone some way towards the Labour party. Its latest policy document, entitled "Renewing Democracy", states that
it would be far healthier for democracy if councils were responsible for raising locally a much higher proportion of the money they invest and spend".
I am interested that Labour Members are prepared to attack any move to increase council tax when they want a "much higher proportion" and we are suggesting a small proportion.

Mr. Harry Greenway: Has my right hon. Friend taken account of Labour councils such as Ealing, which have substantial reserves from previous Conservative administrations? Will he be pressing for those reserves to be used where that is needed? Does my right hon. Friend agree that following the education settlement for Ealing it will be indefensible for the council to continue its policy of refusing a travel grant to children who wish to travel to schools some way away from home, even if their parents are on income support, on the ground that they could choose a nearer school? Parents have a right not to do so under current legislation.

Mr. Gummer: I must declare an interest. One of my children attends the local Church school in Ealing. The education provided by that school is very good. I have noticed, however, since Ealing borough council changed hands, that a series of petty and vindictive steps has been taken by the new council, including a step to which my hon. Friend has referred. The council does not like the possibility of parents choosing. I hope that my hon. Friend will join me and other parents to ensure that the money that is provided for Ealing gets through to the schools.

Mr. Eric Pickles: Does my right hon. Friend remember a time when a 4.5 per cent. increase in education SSA would have been welcomed throughout the House? My right hon. and hon. Friends have done even better for Essex, where there will be an increase of 4.9 per cent. That will be worth nearly £26 million, a sum that is larger than some district councils' total budgets. Does my right hon. Friend agree that some of the alibis that we have heard this afternoon—it has been suggested that there will be no increases—will not wash with parents and head teachers? The councils that do not pass on the extra funding will be rightly brought to retribution.

Mr. Gummer: It is important for my hon. Friend to ensure that every head teacher, governor and parent in Essex realises that there will be a 4.9 per cent. increase in the funding that should be available for their schools. Essex county council, like Suffolk county council, sought to frighten people by talking about a 5 per cent. decrease. Against that background, Essex county council owes it to parents to write, "Sorry, the figure was not minus 5 per cent. but plus 4.9 per cent.", and to ensure that every penny of the increased funding gets through to schools.

Mr. Geoffrey Clifton-Brown: Does my right hon. Friend recall that last


year the Liberal-dominated Gloucestershire county council cut individual school budgets by between 4 and 7 per cent. Will he confirm that this year's figures will allow that council to set a council tax, if it wishes to, which will provide for a generous 5.3 per cent. increase in funding for education? Would not every parent, governor and teacher be able to regard it as a scandal if the county council did not substantially increase individual school budgets?

Mr. Gummer: It will he a scandal if school budgets do not increase in that way in Gloucestershire. It will not be a surprise, however, if that does not happen. Liberals in Gloucestershire have shown themselves willing to play party politics with children's education. They have done it in Gloucestershire and elsewhere. I know of nothing in the past that has been like that. I am sorry that the Liberals should have lowered themselves to that level.

Mr. Richard Tracey: I thank my right hon. Friend for the care that he has given to education in Kingston upon Thames. I reassure him that I will support any measure which ensures that the £1.25 million extra spending for schools in Kingston goes to schools and is not milked off by the local authority.
On a separate issue, will my right hon. Friend use the greatest caution in relation to the area cost adjustment as it affects London? Although my right hon. Friend represents a constituency elsewhere, he lives in London, so he will know that London is more expensive simply because of the number of tourists, the greater use of the roads, the increased use of the city because of the railway stations and the airports, and the increased cost of care for the elderly.

Mr. Gummer: As a Minister, I live in London during the week, but at the weekends and when Parliament is not sitting, I live in the country, so I am entirely independent on the matter. I can see both sides of the case, which have been adequately presented in the House. That is why I have decided that there should be an independent inquiry, which will no doubt look carefully at the points raised by my hon. Friend. However, it will also have to consider my county's concerns regarding sparsity, distance and the difficulty of paying for small schools which are necessary if adequate and proper education is to be provided for small communities. I cannot say that the argument is all on one side. That is why the argument is so difficult to get straight and that is why we have asked for an independent inquiry.

Mr. Ian Bruce: My right hon. Friend will know that the Minister of State, Home Office, my right hon. Friend the Member for Penrith and The Border (Mr. Maclean), has sent round a letter putting in layman's terms what the increases could mean to police authorities—for example, 66 additional officers for Dorset and a total increase of 6.2 per cent. Will my right hon.
Friend ensure that his other ministerial colleagues do something similar, particularly with regard to education? Last year, when it came to ensuring that schools were adequately staffed, Dorset county council said that it was £5 million short, yet we have now discovered from the auditor that the county filched £10 million that it did not need to spend.

Mr. Gummer: My hon. Friend points to the generality. One could understand that being accidental if it occurred in one council, but when it occurs in almost every Labour or Labour-Liberal-controlled council, one has to recognise that there is a concerted effort, which goes as follows. People are frightened by the prospect of a cut which will not come; the council gets an increase but says that there has been a cut, and then the money is put into something else. In my county, money for schools has been put into road signs and red lines across roads. I hope that this time the county will ensure that every penny goes to the schools.

Mr. Jacques Arnold: People in Kent will be delighted to know that the Government are putting an additional 4 per cent. of funding into the county and into its schools. They will also be more than a little relieved because they were led to believe by a document produced with council tax payers' money that there would be no additional money for inflation or pay awards. Bearing in mind the fact that the schools were short-changed last year, what are the prospects for that money finding its way to the Kent schools?

Mr. Gummer: There is no doubt that Kent schools will be able to cover reasonably expected increases in expenditure and probably something rather better than that. But if Kent county council was more concerned about its priorities and spent its money in the schools, it could do even better. But I fear that we may have to wait for Kent county council to cease to be run by the alliance and return to sensible Conservative control.

Mr. Dobson: Rather than have a rant, which is the Secretary of State's usual response to questions from Opposition Members, will he simply confirm that none of the figures quoted by Conservative Members with regard to funds for education makes any allowance for the 86,000 increase in the number of school pupils, the expected pay increases, the expected level of inflation or the additional legal duties which the House has placed on local education authorities?

Mr. Gummer: Some of the money that has been given to the local authorities and some of their added spending will obviously have to cover their additions during the coming year, which is what always happens. But if this is an inadequate settlement, the hon. Gentleman might like the opportunity to say publicly how much would be an adequate settlement, and from where the money would come. The hon. Gentleman is incredible in the House.

Welsh Grand Committee

The Secretary of State for Wales (Mr. William Hague): With permission, Madam Speaker, I should like to make a statement about the future proceedings of the Welsh Grand Committee. I have a number of proposals to make, which I hope will ensure that Welsh concerns are debated effectively in the House and which will bring the business of Parliament more effectively to Wales. With that in mind, I am proposing to seek to amend Standing Orders so as to extend and enhance the role of the Welsh Grand Committee.
The Welsh Grand Committee has for many years provided the House with a mechanism by which Members can give detailed consideration to matters relating exclusively to Wales. It is a mechanism which, in recent Sessions, has been relatively little used. In the past three years, there have been only eight meetings of the Committee, even though they have generally been held whenever requested.
I wish to change that disappointing picture. The Welsh Grand Committee has the potential to bring the business of the House to the attention of the people of Wales, and provide a more useful forum for discussion than at present.
First, I wish to introduce Question Time proceedings to the Committee. Interest in Welsh questions is considerable. On every occasion, there are many questions that cannot be reached, and I want to extend the opportunities for oral questions, to the Welsh Grand Committee.
I am therefore proposing that the Committee's Standing Orders should provide for an additional Question Time at some meetings, on dates to be specified in advance with the agreement of the House.
The normal arrangements for giving notice of questions would apply. Each member of the Committee would be able to table one question for answer on a specified day, and 10 sitting days' notice would be required. Questions will be taken at the beginning of sittings of the Committee, and could last for up to 30 minutes. Replies to questions not reached would be printed in the Official Report.
I hope that Members on both sides of the House will welcome this additional opportunity to put questions directly to me and my colleagues about the conduct of the Government's business in Wales, and appreciate that that will significantly increase their ability to raise issues of immediate concern.
I would like the Committee to be able to consider issues of current topical concern in more depth than is possible at present on the Floor of the House. I am therefore also proposing that the Committee will be able to hold short debates to allow more detailed consideration of a smaller number of specific questions.
Each member of the Committee will he able to give notice of a subject to be raised in a short debate on a specified day, with 10 days' sitting notice required. Proceedings on short debates will he allowed to continue for 30 minutes, which should be sufficient time to allow two or three subjects to be raised on each occasion.
In addition, and because I am aware that Members may from time to time wish to raise matters of particular concern to their constituents, I am proposing that in future

the Welsh Grand Committee should be able to hold Adjournment debates on matters raised by Members, at the end of the Committee's normal business.
I am also proposing that in future any Minister in the House, whether or not he or she is a Minister for Wales, may take part in debates in the Welsh Grand Committee, enabling them to participate fully in discussion of matters relating to their United Kingdom responsibilities. Any Minister, whether or not he or she is a Member of the House, would also be able to make a statement and to answer questions arising from that statement.
That would represent a very significant and beneficial change in the Committee's procedures. It would enable Members representing constituencies in Wales to listen to and question a Minister with UK or Great Britain responsibilities that affect Wales. It will give the Welsh Grand Committee the scope to examine all aspects of Government policies affecting Wales, and not only on matters that are the responsibility of the Secretary of State for Wales. It will give Welsh Members a further opportunity to debate Welsh affairs while benefiting from their role in a United Kingdom Parliament.
I am pleased to be able to tell the House that my right hon. Friend the Prime Minister and my right hon. and learned Friend the Chancellor of the Exchequer have both said that they will be prepared to attend a meeting of the Committee if the amendments to Standing Orders are approved by the House.
All those changes will, of course, be in addition to the Committee's existing provisions, and the emphasis will still be on broad-ranging debates on issues of general concern about policy in Wales. Wales does not have a separate legal framework and I am therefore not proposing an additional legislative role for the Committee. I propose that there should be a minimum of four meetings of the Committee each year and that they should be timetabled in advance, allowing notice for the tabling of questions and subjects for short debates. In addition, I would expect it to meet on at least a further two or three occasions, as business permits and issues arise.
To date, two meetings of the Welsh Grand Committee have been held in Cardiff. I want to see it meet more frequently in Wales, and not just in the capital city. It is important to give people in other towns and cities the opportunity to witness the Committee's debates and thus to recognise that the business of the House and of the Committee is intimately concerned with the impact of Government policy on people in all parts of Wales. I appreciate that meetings outside the House place special demands on the House authorities, and officials at the Welsh Office will be ready to offer whatever assistance may be needed in establishing meetings of the Committee in suitable venues across Wales. I would envisage half the timetabled sessions of the Committee taking place in Wales each year, and up to half the additional meetings.
The new Standing Orders will be brought forward for approval shortly. Should the House agree them, I would expect soon thereafter to table a motion setting out a timetable for the rest of this Session.
I hope that the House will welcome my proposals to give the Welsh Grand Committee a more prominent and visible role in the consideration of matters relating to Wales. My proposals will greatly enhance the ability of Members to raise constituency matters and other issues in Parliament. They will help to ensure that discussion of


Welsh business is made more accessible to the people of Wales and that our procedures better reflect the Welsh dimension.

Mr. Ron Davies: The statement holds out the tantalising prospect of the Prime Minister addressing a meeting of the Welsh Grand Committee at Machynlleth, talking about the efficacy of the hill livestock compensatory allowance. It really would be an interesting experiment.
The statement itself is a welcome admission by the Secretary of State of the inadequacies of the current arrangements for the exercise of democracy in Welsh affairs. The greatest need, of course, is for the representatives of the Welsh people to control our own devolved affairs in Wales, in our own directly elected assembly. That is and will remain our priority, and no amount of tinkering with the existing procedures will divert us from that.
Does not the Secretary of State understand that the only meaningful change, short of devolution, would be to allow the Welsh Grand Committee to take decisions or to influence policy? Without such policies, the Welsh Grand Committee is and will continue to be nothing more than a talking shop. In his statement, the Secretary of State criticised the existing arrangements for being ineffective. Does he not realise that the House of Commons Standing Orders already allow for great discretion to be exercised by the Committee? It does not require to be given, as he suggested, an additional legislative role. It already has one, specified in Standing Order No. 98. The trouble is that the Government have always prevented the Committee from exercising those powers on, for example, local government reform or the Welsh language Act, by suspending Standing Order No. 86.
Will the Secretary of State confirm that the only reason why he is not prepared to allow the Welsh Grand Committee a real role is that he realises how hostile the opinion of Welsh Members of Parliament is to the record of cuts, unemployment, social divisions and abuse of power, which are his Government's hallmarks? Nothing illuminated that better than yesterday's meeting of the Welsh Grand Committee, where he was forcibly reminded of the virtually unanimous opposition in Wales to the introduction of the nursery voucher scheme. Will he now acknowledge the weight of opinion that was expressed at that Committee and drop that petty and divisive scheme, if only as a sign that he is sensitive to the majority of Welsh opinion? Does he not realise that failure to do that would make a mockery of his pious statements about reforming and improving democracy in Wales?
We in the Labour party certainly want to see improvements. Will the Secretary of State confirm that he has received, through the usual channels, our own radical and constructive proposals for change? I also remind him that without the co-operation of Opposition Members, the Committee would not function, so I ask him now for his confirmation that the details of any changes will be implemented only after agreement has been reached via the usual channels.
The prospect of Ministers coming to introduce themselves to the people of Wales via sittings of the Welsh Grand Committee is a novel one and, presumably, is part of the strategy for the Conservative party rather than for the better government of our country. As the Prime Minister has never visited Wales as Prime Minister,

except to fulfil the occasional party political engagement, will the Secretary of State confirm that the most appropriate subject for any debate involving the Prime Minister is the failure of the Conservative party to deliver economic prosperity, social cohesion and democratic government to Wales?
The Secretary of State's proposals are modest, but provided he is prepared to work with all the Opposition parties on the Committee, they can be made to work to bring about improvements in the way in which the House conducts its business. However, that will be for a short and experimental period only. These changes, if accepted, must and will be superseded by more far-reaching democratic reforms when the right hon. Gentleman's discredited Government are finally removed from office.

Mr. Hague: It is ironic that the hon. Gentleman should refer to talking shops when he wishes to set up an assembly in Wales that would be a highly expensive talking shop. It would be expensive to the taxpayer and damaging to jobs and investment in Wales, and it would diminish the role of the United Kingdom Parliament in Welsh affairs, whereas what we seek to do today is to enhance the role of the United Kingdom Parliament in Welsh affairs.
It is surprising that the hon. Gentleman describes my proposals as modest, as they go further than the proposals that he tabled two weeks ago, which, as he said, he communicated through the usual channels and which were published for public consideration in newspapers in Wales. My proposals go further: in involving Ministers with UK responsibilities, in bringing the work of Parliament closer to people in Wales, and in holding meetings of the Committee in different locations in Wales. None of those was contained in the proposals that he tabled two weeks ago. Nor was there any proposal about legislative consideration, to which he refers as the only meaningful change. I know about the provision in the Standing Order to which he referred. That is why I said in my statement that there would be no additional legislative role for the Grand Committee.
There is no question but that my proposals go further than those of the hon. Gentleman. I look forward to discussions about the proposals and am open to every idea and suggestion about developing them further, but the eventual decision about changes to Standing Orders is one for the House as a whole to take.

Mr. Alex Carlile: Will the Secretary of State assure the House that he has no intention of amending Standing Order No. 98, which gives the Welsh Grand Committee the right in certain circumstances to consider Bills that are referred to it, in other words, to have a legislative role? If he has no intention of repealing Standing Order No. 98, will he explain why he made no mention in his paltry, miserable statement of referring any legislation to the Welsh Grand Committee under Standing Order No. 98, and explain why the Government are so frightened of using it that we were not even allowed to consider the Local Government (Wales) Act 1994 when it was presented by the Government to the House? Will he give us one example of a measure about Wales on which he is prepared to give those who are elected to be legislators for, among other places, Wales, the right to legislate for the country that we represent?

Mr. Hague: I do intend that we should amend Standing Order No. 98, but not in the way that the hon. and learned


Gentleman fears; I have no intention of removing the provision to which he referred. But he will also know that Wales does not have the separate legal framework that exists in Scotland and that has enabled the Scottish Grand Committee to discuss particular measures. We are talking about something in a quite different context, and no specific Welsh legislation is coming before the House in the current Session. I can reassure him, however, that I have no intention of proposing the sort of change in the Standing Order to which he referred and which he would oppose.

Mr. Richard Spring: Does my right hon. Friend agree that his proposals to hold meetings of the Welsh Grand Committee in different parts of Wales will add locally to the interest and activities of the Committee and, indeed, the proceedings of the House in general?

Mr. Hague: My hon. Friend is absolutely right. The proposal was not put forward by Opposition Members, but I hope that they will welcome it. It is a procedure used by the Scottish Grand Committee and it has been well received in Scotland. There is no reason why people in Wales should not have the same opportunity to see their Grand Committee at work, and it will be widely welcomed throughout Wales.

Mrs. Ann Clwyd: Does not the Secretary of State realise that, for the past 16 years, the Welsh people have seen the Welsh Grand Committee at work and they look on this proposal as yet another meaningless sop to the true aspirations of the Welsh people? But then, of course, we have seen a succession of Secretaries of State for Wales who do not represent Welsh constituencies or understand the Welsh people, and whose party will never represent the people of Wales. Does not the right hon. Gentleman understand that the real aspirations of the people of Wales are for a Welsh Assembly, with devolution and proper control over their own affairs, not the useless suggestion that he has made yet again today?

Mr. Hague: The hon. Lady will recall that those 16 years began with an emphatic rejection by people in Wales of the idea of such an assembly. I do not think that it is meaningless for the hon. Lady, under these proposals, to have additional opportunities to put questions to Welsh Ministers, raise Adjournment debates and have short debates about matters of constituency concern. Those are not meaningless matters—they are enhancing the ability of Welsh Members of Parliament to represent their constituents and to bring matters before the House of Commons. That is a long way from being a meaningless proposal.

Mr. Hartley Booth: In terms of the United Kingdom constitution, will my right hon. Friend confirm that having the Prime Minister and senior members of the Cabinet travel to Wales to meetings of the Grand Committee is a constitutional novelty? Rather than call it a talking shop, would it not be more appropriate to call it a listening channel?

Mr. Hague: My hon. Friend is right. It is a novelty and it will happen in Scotland and Wales. It will be a popular procedure, it will be widely appreciated and it will enable

my right hon. Friend the Prime Minister and my right hon. and learned Friend the Chancellor of the Exchequer to point to the many successes of Government policy and the improving situation in so many aspects of the Welsh economy, to which Opposition Members are always determined not to refer.

Mr. Donald Anderson: Although he was a youngster at the time, the Secretary of State may recall that in 1979, after the referendum, the incoming Conservative Secretary of State, Lord Crickhowell, said that he would consult about various proposals, including a forum for Wales. It was assumed at the time that specific legislative proposals—institutional proposals—would follow. Sixteen years have passed; this is it. If it is a revamped talking shop, it is a peripatetic talking shop. Surely it will go down in the "Guinness Book of Records" as the longest recorded gestation period of a mouse.

Mr. Hague: What we are seeing is a genuine attempt to improve the workings of the Welsh Grand Committee. At present, its workings are not regarded as satisfactory by people on either side of the House or any party in it. We shall be able to make the proceedings of the Committee more meaningful and more topical, and to ensure that a greater variety of matters can be raised and that particular constituency matters can be raised. Those are proposals that deserve a warm welcome in the House.

Mr. Ian Bruce: Will my right hon. Friend confirm that those changes in the Standing Orders of the Welsh Grand Committee mean that more subjects can be raised—indeed, all subjects to do with the United Kingdom? Perhaps more importantly, can he contrast the cost of that sort of Welsh Grand Committee with that of a directly elected Parliament, which would have no more powers than the Committee would have anyway?

Mr. Hague: My hon. Friend is right. A far greater range of topics can be raised, and they can be raised by Welsh Members of Parliament in their role as Members of Parliament in this House in the United Kingdom Parliament. Such proceedings will have an additional cost, but the cost of having a completely separate assembly for no obvious purpose would be vastly greater. The direct costs to the taxpayer would be vastly greater, as well as the costs to the Welsh economy in lost inward investment and jobs, from the people who would be frightened away by the prospect of a fracturing of the United Kingdom—or the Balkanisation of the United Kingdom, as one Opposition Member referred to it not long ago.

Mr. Ted Rowlands: Even in these modest proposals, is it not an assumption that there are distinctive policies that should be followed in Wales for the needs of Wales? If, as a result of all his listening, the Secretary of State finds out, for example, that nursery vouchers have no support in Wales, will he be willing to change the policy?

Mr. Hague: Of course, there is often a need for distinctive policies in Wales. I and my predecessors have pursued distinctive policies, which are different from policies for England in several respects. The Welsh Grand Committee is an additional forum for discussing what those differences should be.

Mr. Alan Williams: The Secretary of State's proposals are to be welcomed in the spirit that any


change is bound to be preferable to what we have at the moment. In pursuit of his greater topicality, why is he introducing a system in which, unlike on the Floor of the House where questions can be tabled two days before, he will require 10 sitting days' notice, which is two calendar weeks?
In addition to the minimum four meetings that the right hon. Gentleman specified, will he consider the possibility of another four, to consider the reports of the Select Committee on Welsh Affairs, which are never debated? Finally, since he refuses to let the Committee have any legislative functions, does he recognise that, although legislation is not separate for Wales in most instances, there are Welsh dimensions, so the Welsh Grand Committee could provide a useful function as a Special Standing Committee? We could hear evidence from experts and others on the Welsh aspects prior to dealing with legislation on the Floor of the House.

Mr. Hague: I thank the right hon. Gentleman for his constructive welcome for the proposals. On oral questions, the rule would be the same as it is on the Floor of the House, that is, 10 days' notice of an oral question. Written questions can, in any case, be submitted for answer in two days or more and the proposal will not interfere with that procedure. I envisage that there would be scope for supplementary questions at the meetings and not merely for the questions tabled on the Order Paper.
As to the other subjects that could be debated, for instance the Select Committee reports, there need be no restrictions, as there are no restrictions now, on the subjects that the Committee could discuss. That would be for discussion between the usual channels. Of course, members of the Grand Committee must have a say in what the business of that Committee should be. I envisage that the two, three or more meetings that will be additional to the four timetabled meetings would be used to discuss some of the matters to which the right hon. Gentleman referred.

Mr. Ieuan Wyn Jones (Ynys Môn): Is not the Secretary of State aware that this timid little mouse of a statement is totally irrelevant to the needs of the people of Wales? He needs to address his mind to the enormous democratic deficit in our country, given that he is a member of a Government who have been rejected four times since 1979. Is not it right that the people of Wales, far from wanting a tarted-up talking shop like his proposal, are looking forward to the day when they can have a real Parliament in which real decisions are taken—a Parliament with legislative powers that will respond to the wishes of the people of Wales, not those of a Conservative Government who have been rejected by them?

Mr. Hague: The hon. Gentleman and I have an obvious difference of view: I believe in the United Kingdom and he does not. I believe that the Government of the United Kingdom are elected by the people of England, of Scotland, of Wales and of Northern Ireland, and that that should continue to be the position. I do not think that we shall be able to reconcile that fundamental difference of view, but I would have hoped that the hon. Gentleman could have found it in himself to give a stronger welcome for what will be a distinctive improvement in the workings of Parliament for Welsh Members. They will be able to raise a wider range of issues and more

constituency issues, and will be able to question Welsh Office Ministers and debate with other Ministers more often.

Mr. Paul Flynn: Has the Secretary of State noticed what happened on the two most recent occasions on which public opinion in Wales was measured? Conservatives managed to win 4 per cent. of the council seats, and at the Islwyn by-election they secured 3.9 per cent. of the total vote, narrowly beating the Natural Law yogic flyers and Lord Sutch's Loony party. Now that the Conservatives have established themselves as the prime loony party in Wales, how can they claim the right to dominate Welsh legislation—legislation that affects Wales alone? When 85 per cent. of Welsh Members signed amendments to Bills on the Welsh language and on Welsh local government, their opinions were swept aside by the dominance of Members from other parts of the United Kingdom, whose constituents were not affected in any way by the legislation. Is not that a travesty of democracy?

Mr. Hague: The hon. Gentleman knows that we all live and work in a United Kingdom Parliament. If he does not believe in a United Kingdom Parliament—and that is the implication of what he is saying—he had better say so.

Mr. Flynn: indicated dissent.

Mr. Hague: I think that the hon. Gentleman does not believe in a United Kingdom Parliament; we have got that clear, because he is shaking his head. Those of us who believe in a United Kingdom Parliament—I happen to think that the great majority of the people of Wales believe in one—should be concentrating on ensuring that that Parliament works well. My proposals will ensure that it works better for Welsh affairs.

Mr. Peter Hain: Surely the announcement is a panic reaction to the overwhelming support for Labour's policy for an elected assembly in Wales. [Laughter.] Yes it is. Why does not the Secretary of State admit that he is adopting the same old English establishment approach to demands for constitutional reform? We have seen that reaction over votes for working-class citizens and over votes for women. First, people deride such demands as loony. Then, when the pressure keeps coming, they resist forcibly. Then they try to buy the protesters off, which is what this pathetic proposal is about. Finally they cave in, and when they have done so, nobody ever admits to having opposed the demands in the first place. Why does not the Secretary of State short-circuit that miserable process and grant the Welsh people's demand for an elected assembly now?

Mr. Hague: The hon. Gentleman knows why I do not want a Welsh Assembly. I have explained several times this afternoon. He also knows that when the opinion of the people of Wales was tested, they emphatically did not want an assembly either. Even if we agree to differ on the question of a Welsh Assembly, the hon. Gentleman knows that the Labour party published proposals for reforming the Welsh Grand Committee a couple of weeks ago and that our proposals go further than Labour's. The way in which the hon. Gentleman has characterised the whole process is highly inaccurate. We are making a sincere attempt to improve the workings of Parliament, and I think that it will succeed in that objective.

Mr. Alan W. Williams: Over the past 20 years, I have spoken to more people about devolution than


almost anybody else in the House, while the Secretary of State has been in his post for only a few months. No one has ever put it to me that the answer to the problems of Wales lies in extending the powers of the Welsh Grand Committee, because 99 per cent. of the population of Wales are completely unaware of its existence. Did not the Secretary of State's statement underline how out of touch he and the rest of the Government are with the rightful demands of the people of Wales? We want the budget that he quite improperly controls to be administered democratically and accountably by an elected Welsh Assembly.

Mr. Hague: The hon. Gentleman is right to say that most of the people in Wales would not know about the Welsh Grand Committee or what it does. But that makes the case for changing its procedures, for breathing new life into it by revitalising and rejuvenating them. That is what the proposals are about. We strongly differ across the Floor of the House about the prospect of a Welsh Assembly. Conservatives believe that it would be a threat to the future of the United Kingdom, and an expensive talking shop. However, we should all be able to agree that the procedures of the Welsh Grand Committee need improving and that it needs to be made into a more topical and useful forum for discussion. That is what we propose to do.

Mr. Rhodri Morgan: Having listened to the Secretary of State's proposal, I fear that Mogadon man is proposing a Mogadon marathon of meetings all over Wales of a Welsh Grand Committee with zero powers. I am afraid that the right hon. Gentleman peaked as a speaker at the age of 16. We would not want to see any changes in the powers of the Welsh Grand Committee unless they were a lead-in to a genuine democratically elected body for Wales. By now. the Secretary of State must have the clear impression that that is our attitude.
We do not want a talking shop, even a travelling talking shop, because it would still be toothless. The right hon. Gentleman talked about changing Standing Orders, but he must realise that we want a guarantee that the Standing Orders of the House will be respected in the future, in a way in which they have not been respected in the past. We want a guarantee that he will not use the Tory majority on the Floor of the House to remove the rights conferred by Standing Orders Nos. 86 and 98 for the Welsh Grand Committee to consider exclusively Welsh legislation.
Is not the Secretary of State attempting to parallel the meaningless gesture of Edward I, seven centuries ago, who promised that he would create a Prince of Wales who spoke no word of English, and then offered the young infant Edward II, who was only three months old and could not have spoken any language at all? The people want not meaningless futile gestures but a democratically elected body for Wales with real powers.

Mr. Hague: I am not sure whether to take it from the hon. Gentleman's remarks that he does not want the Welsh Grand Committee to travel to different parts of Wales, but that was the clear implication of what he said. I believe that that is an important part of the proposals and should be strongly welcomed throughout the House, as it will be in Wales.
The Labour party has one policy for Scotland, another for Wales and another for the different regions of England. It has a dog's breakfast of a policy on constitutional matters, which has not remotely been thought out with the interests of the United Kingdom at heart, but has been designed to do what Labour thinks will appease nationalist sentiments in each separate part of the kingdom.
Conservatives emphatically reject that approach. We want the United Kingdom Parliament to work effectively, so that Members from every part of the United Kingdom can use it to full and beneficial effect. I am surprised that Opposition Members have not been able to welcome more enthusiastically something that they will be able to use as much as Conservative Members will, to the benefit of their constituents and of wider public debate.

Business of the House

Mrs. Ann Taylor: Will the Leader of the House please give us the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): After all that excitement, I shall make a statement about next week's instalment. The business for next week will be as follows:
MONDAY 4 DECEMBER—Continuation of the Budget debate.
TUESDAY 5 DECEMBER—Conclusion of the Budget debate.
WEDNESDAY 6 DECEMBER—Until about 8 o'clock, Second Reading of the Audit (Miscellaneous Provisions) Bill.
Remaining stages of the Chemical Weapons Bill.
Motion on the criminal injuries compensation scheme.
THURSDAY 7 DECEMBER—Debate on the European Union on a motion for the Adjournment of the House. Details of the relevant documents will be given in the Official Report.
FRIDAY 8 DECEMBER—Debate on the Government's policy against crime on a motion for the Adjournment of the House.
The House will also wish to know that European Standing Committees will meet at 10.30 am on Wednesday 6 December, as follows:
European Standing Committee A, European Community Document 8962/94 and COM(95)434 relating to the fruit and vegetable regime.
European Standing Committee B, European Community Document 9554/95 relating to food aid.
In the following week, on Monday 11 December there will be the Second Reading of the Asylum and Immigration Bill. On Tuesday 12 December there will be the Second Reading of the Armed Forces Bill. On Wednesday 13 December, there will be Government business, the nature of which has yet to be determined. I expect Thursday 14 December to be an estimates day, subject to the recommendations of the Liaison Committee at its meeting on 5 December. Friday 15 December is, I remind the House, a non-sitting day.

[Wednesday 6 December:

European Standing Committee A—Relevant European Community documents: (a) 8962/94, Fruit and Vegetable Regime; (b) COM(95)434. Relevant reports of the European Legislation Committee: (a) HC 48-xxvii (1993–94) and HC 70-ii (1994–95); (b) HC 51-i (1995–96).

European Standing Committee B—Relevant European Community document: 9554/95, Food Aid; Relevant report of the European Legislation Committee: HC 70-xxvi (1994–95).

Thursday 7 December:

Debate on the European Union—Relevant documents: The Twenty-fourth Report of the Select Committee on European Legislation, Session 1994–95, on the 1996 Intergovernmental Conference: the Agenda; Democracy and Efficiency; the Role of National Parliaments (HC

239–1); Resolution of the European Parliament on the functioning of the Treaty on European Union (A4–0102/95); Report by the Commission on the operation of the Treaty on European Union (SEC(95)731); Report of the Council on the functioning of the Treaty on European Union (Cm 2866); Unnumbered Report by the Court of Auditors on the operation of the Treaty on European Union; Unnumbered Report of the Court of Justice on certain aspects of the application of the Treaty on European Union; White Paper on Developments in the European Union January-June 1995 (Cm 3130).]

Mrs. Taylor: I thank the Leader of the House for that information. May I remind the right hon. Gentleman of the exchanges at business questions last week, when the Leader of the House was asked about the BBC World Service, but said that he felt he could not respond because he could not anticipate the Budget statement? Will he look at the issue of the World Service again, because we now know that the Chancellor has slashed the World Service's capital funds by £5.4 million—a massive 20 per cent.? That tears up an agreement which was negotiated in good faith by the World Service and which was to have lasted for three years.
The BBC chairman, I understand, has expressed his concern about the impact of the cuts on the World Service, and I believe that there is widespread public support for the BBC World Service which is shared by Members on both sides of this House. Will the Leader of the House now consider a specific debate on this cost-effective service which has been struggling with a tough financial settlement and which may now have to reduce its—and therefore Britain's—voice in the world? Will he think again on that issue?
Secondly, we heard the Prime Minister today at Prime Minister's Question Time trying to defend the actions and record of Yorkshire Water in recent months. The latest figures show that while Yorkshire Water has been threatening thousands of families in Yorkshire—and West Yorkshire in particular—with rota cuts, it has been making record profits. That shows, as Yorkshire Waterwatch has said, that
it is clear that the company has had enough cash sloshing about all Summer to have dealt with the underlying problems much more quickly".
There is also a danger that Yorkshire Water might seek to use the cost-pass-through mechanism to try to make sure that investment costs are passed to consumers. Is it not time that we had a full debate on the need for better regulation of the privatised utilities so that we can air our concerns that, time after time, the interests of shareholders are put before the interests of consumers? We have seen clear examples of the concerns that have been caused by that behaviour, especially in Yorkshire, and the House should have a full debate on the regulation of the public utilities.
Finally, is the Leader of the House aware that, in recent days, Resurgence Railways has been dropped as the Government's preferred bidder to take over the Great Western Railway because it could not offer adequate financial guarantees? Today we have learnt that the first part of the passenger railway service to be privatised, the special trains division, is in deep trouble as its new owners, Waterman Railways, is in bitter dispute with BR and Railtrack about charges for track access and other services. Given the scale and frequency of the difficulties


arising with rail privatisation, surely we should have a full-scale debate in the House before this fiasco goes any further.

Mr. Newton: The hon. Lady was perhaps more political than she usually is on these occasions, and I shall not reply in quite those terms. I cannot give any commitment to provide time for debates on any of the matters that she has raised although, as always, I shall consider what she says. I have no doubt that there will be opportunities to raise those matters in various ways in the next few weeks.
In response to the hon. Lady's comments on the first subject, I would have thought that it would probably be in order to raise that matter during the Budget debate, since it arises from what she attributes to the Chancellor of the Exchequer's statement on Tuesday. I shall bring all of the hon. Lady's remarks to the attention of my right hon. Friends who have responsibility in those areas.
I thought that the Prime Minister made a perfectly sensible point at Prime Minister's Question Time today when he simply stated the fact that Yorkshire Water will, we understand, be investing more than £200 million this year—more than double its half-year profits. The fact is that money for investment clearly must come from somewhere, and the Opposition are always demanding more investment.

Mrs. Jacqui Lait: In view of today's statement on the revenue support grant, would it be in order to debate education in the Budget debate? We could then put under the microscope the behaviour of local education authorities such as East Sussex, which are scaring parents, teachers and governors into unnecessary concerns about potential cuts which prove to be totally wrong.

Mr. Newton: It is not for me to advise my hon. Friend about what is or is not in order during the Budget debate. But I understand that it would be in order to refer to the expenditure side of the Budget under the arrangements that we now have. I am sure that even if my hon. Friend is unable to participate in the debate, her remarks will be carefully studied.

Mrs. Gwyneth Dunwoody: May I commend the Leader of the House for his noble efforts to give us as much information as possible as early as possible? Close study of the Order Paper makes it very clear that the fruit and vegetable document—a very important piece of European legislation that will have a direct effect upon a great many fruit and vegetable growers and customers in this country—is to be debated on Wednesday morning and immediately voted upon on Wednesday evening.
I did hope that the Government had got away from this cavalier attitude, which assumes two things—first, that European Standing Committee A will totally accept whatever it is told on Wednesday morning. and secondly, that there will be no dissenting amendment. I hope that this will not become a habit. If it does, Parliament will get a reputation for ignoring the interests of its constituents.

Mr. Newton: I am grateful for what the hon. Lady said at the start of her question. I am not absolutely sure of the background to the point that she then went on to raise,

but I shall look into it. We try to avoid the occurrence of such matters, but sometimes it becomes inevitable because of the timing of business in Europe. I shall look into what may have happened on this occasion.

Mr. Bob Dunn: Will the Leader of the House provide time for an urgent and early debate on the future of selective schools in England? If those schools are not allowed to select their pupils—either by examination or by interview—they will become comprehensive schools. That is an important fact to advertise in the House and elsewhere in the nation.

Mr. Newton: My hon. Friend has raised an important point, but I do not think that I can promise time for a dedicated debate, as it were. But it was clear from the Gracious Speech that there will be a number of opportunities to debate education matters during this Session.

Mr. Simon Hughes: Following on from the question from the hon. Member for Hastings and Rye (Mrs. Lait), will the Leader of the House confirm that there will as usual be a debate before we rise for Christmas on the local government settlement pursuant to today's statement? Can he give an indication as to the dates of the specific supplementary legislative proposals to implement the Scottish and Welsh procedural changes announced by the two Secretaries of State yesterday and today?

Mr. Newton: On the latter point, I cannot at present give a specific time for the debates. We would like to get the changes agreed by the House as soon as possible in order that their beneficial effects should be felt as soon as possible. I have forgotten the first part of the hon. Gentleman's question.

Mr. Hughes: The local government settlement.

Mr. Newton: I am not sure if the hon. Gentleman is right to say that there is normally a debate before Christmas. I shall look into it, but my recollection is that the matter is normally debated when the orders are brought before the House in the early part of the new year.

Mr. Anthony Coombs: May we have a debate next week on race relations, so that we can investigate the deplorable remarks apparently made by a prominent member of the Labour party from Leicester on "Dispatches" only last night? Regarding the deputy leadership of Leicester city council, he asked:
Why should we have a white person?
May we have a debate so that we can discuss whether such overt racist language is Labour party policy?

Mr. Newton: I did not see the programme, but I am aware of reports of it. In view of the serious nature of the allegations that have been made, I am sure that they will be carefully examined, not only by the hon. Gentleman himself but by the Leader of the Opposition.

Mr. David Winnick: In view of the excellent work being carried out by President Clinton, be it now in Northern Ireland or what he has done in Bosnia, and the excellent speech that he gave to us yesterday, will the Prime Minister make some sort of apology next week for how the Conservative party actively tried to stop


President Clinton being elected and quite likely used Home Office records to try to prove that he dodged the draft?

Mr. Newton: Such a question contributes nothing to what we would all like to achieve. I endorse the hon. Gentleman's remarks about the quality of the President's address yesterday. Having been present at that speech and at some more informal exchanges between the President and the Prime Minister, I assure the hon. Gentleman that the relationship between them is very warm.

Mr. Jacques Arnold: May I support the call for a debate on the funding of the BBC World Service because it has an immensely high standing around the world, giving intensified stature to this country among listeners around the world? I would differentiate strictly between the World Service and the BBC's domestic service which is not of such a high standard. The advantage of such a debate is that it would show that Ministers have paid careful attention to the funding of the World Service. They could explain the split funding between grant through the Foreign Office vote and the possibilities for commercial income for the BBC.

Mr. Newton: I note my hon. Friend's suggestion. Like the representation of the hon. Member for Dewsbury (Mrs. Taylor), I shall bring it to the attention of my right hon. and learned Friend the Foreign Secretary.

Mr. Dennis Skinner: As a debate on the local government settlement has been called for, would not it be a good idea, as Ministers have lessons in French and German on the all-party Whip—I have never been—to hold arithmetic lessons for Ministers? We heard the story about £870 million extra for education. Along comes a Minister today and we find out that it is all made up of wage increases and inflation. The result in Derbyshire and many other authorities is that schools will be about £40 per pupil worse off this year than last. It is all a mirage. Let us get the sums done properly.

Mr. Newton: I do not, of course, accept the hon. Gentleman's suggestions. This is a substantial additional sum for education. One thing at least is clear: the hon. Gentleman needs no lessons in English.

Mr. John Marshall: Will my right hon. Friend arrange for an urgent debate on early-day motion 3?
[That this House calls on the Government to acknowledge that over 3,000 people with haemophilia have been infected with hepatitis C virus (HCV) as a result of NHS treatment with contaminated blood products; recognises that over 50 people with haemophilia are now understood to have died from liver disease contracted as a result; and considers giving similar financial assistance to those infected with HCV, who currently receive no additional help, as for those infected in the same way with HIV who have been compensated by the Government.]
He will be aware that the motion has been signed by 250 hon. Members from both sides of the House, which is almost a majority of those eligible to sign an early-day motion. The cost of such a concession would be relatively slight, and it would right a fundamental wrong.

Mr. Newton: My hon. Friend knows of previous responsibilities that I have had in similar matters. I

therefore have great sympathy with those who may inadvertently have been infected with hepatitis C through national health service treatment, but the patients received the best treatment available in the light of medical knowledge at the time. In the absence of negligence, I understand that my right hon. Friend the Secretary of State for Health has no plans for special payments.

Mr. Jim Marshall: When is the Leader of the House likely to proceed with the orders dealing with reorganisation of local authorities that are to have elections in 1997? I hesitate to mention my authority today in view of the criticism, much of it unfair. As the Leader of the House knows, Leicester has been a model for race relations in the United Kingdom for the past 20 years. However, there is increasing concern in my city about the delay in proceeding with the order. Will he seek to allay that fear and give a definite date?

Mr. Newton: I am afraid that I cannot give a definite date this afternoon but I shall bring the hon. Gentleman's question to the attention of my right hon. Friend the Secretary of State for the Environment, who will be responsible for proceeding with the orders.

Mr. Max Madden: If we cannot have a debate on the water industry, particularly Yorkshire Water, will the Leader of the House encourage the Secretary of State for the Environment to make a statement to the House, I hope to announce a wholly independent public inquiry into the affairs of Yorkshire Water, which seems to combine breathtaking incompetence with awesome contempt for its customers?
On the Asylum and Immigration Bill, will the Leader of the House ensure that the so-called white list of safe third countries is published before the Bill's Second Reading, which is to take place a week on Monday?

Mr. Newton: I cannot be as helpful as I would naturally like to be on either point. I have already referred to the Yorkshire Water question, as did my right hon. Friend the Prime Minister. On the latter point, I was present at Home Office questions earlier today when the Minister of State, Home Office commented on that subject. I cannot add to that this afternoon.

Mr. Paul Flynn: When can we debate the savings that could be made by replacing Select Committee trips abroad by techniques such as video conferencing? Not only would that be much more efficient and save a great deal of money, but it might produce much better reports. Has the Leader of the House noticed that many of the reports compiled in the House are much better than those delivered by Committees that travel far abroad? Does not that prove the Chinese proverb that the further one travels, the less one knows?

Mr. Winnick: I would not put it to the vote.

Mr. Newton: The hon. Member for Walsall, North (Mr. Winnick) has been more helpful than I can ever remember him being before. I shall rest on his comment.

Mr. John Spellar: I draw the attention of the Leader of the House to early-day motion 134:
[That this House welcomes the visit of President Clinton to this country and looks forward to the continuation of good relations between the United Kingdom and the USA; believes, however, that this would


be better served by good corporate behaviour of British firms in America; and deplores the attempts by Hanson to cut the wages and conditions of their employees in California.]
Will he arrange time for a debate on the behaviour of British corporations abroad? Should not they enhance Britain's reputation abroad rather than damage it, as Hanson is doing by cutting the wages and conditions of workers in California?

Mr. Newton: Just as the corporate activities of United States companies here would be a matter for them subject to United Kingdom law, the corporate activities of British companies in the United States are a matter for them as governed by US law.

BILLS PRESENTED

RATING (CARAVANS AND BOATS)

Mr. Secretary Gummer, supported by Mr. Secretary Lang, Mrs. Secretary Bottomley, Mr. Secretary Forsyth, Mr. Secretary Hague, Mrs. Angela Knight, Mr. David Curry and Sir Paul Beresford, presented a Bill to make provision about liability for non-domestic rates in England and Wales in relation to certain caravans and boats: And the same was read the First time; and ordered to be read a Second time on Monday 4 December and to be printed. [Bill 9.]

HEALTH SERVICE COMMISSIONERS (AMENDMENT)

Mr. Secretary Dorrell, supported by Secretary Sir Patrick Mayhew, Mr. Secretary Forsyth, Mr. Roger Freeman, Mr. Secretary Hague and Mr. Gerald Malone, presented a Bill to make provision about the Health Service Commissioners: And the same was read the First time; and ordered to be read a Second time on Monday 4 December and to be printed. [Bill 10.]

DELEGATED LEGISLATION

PROBATION

Motion made, and Question put forthwith pursuant to Standing Order No. 101(4) (Standing Committees on Statutory Instruments, &c.),
That the Probation (Amendment) Rules 1995 (S. I., 1995, No. 2622) be referred to a Standing Committee on Delegated Legislation.—[Mr. Bates.]

Question agreed to.

Orders of the Day — WAYS AND MEANS

Order read for resuming debate on Question [28 November].

Orders of the Day — AMENDMENT OF THE LAW

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply, acquisition or importation otherwise than by—

(i) zero-rating or exempting supplies of goods which are, or are to be, subjected to a fiscal or other warehousing regime; or
(ii) zero-rating or exempting supplies of services on or in relation to such goods;
(b) for refunding any amount of tax otherwise than to persons constructing or converting buildings in cases where the construction or conversion is not in the course or furtherance of a business;
(c) for varying any rate at which that tax is at any time chargeable; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Kenneth Clarke.]

Question again proposed.

Orders of the Day — Budget Resolutions and Economic Situation

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang): I welcome the opportunity of this resumed debate on the Budget to emphasise what my right hon. and learned Friend the Chancellor has made clear in each of his Budgets: that the single most important contribution that the Government can make to fostering growth and improving competitiveness—both of which are essential for business success and national prosperity—is to provide a stable macro-economic background. That means controlling public spending, achieving and sustaining low inflation and keeping Government borrowing and taxation low. Hence we have a Budget that works towards those objectives: Government borrowing falling to zero in the medium term; getting public spending to below 40 per cent. of national income; getting inflation down below 2.5 per cent. and keeping it there; and progress towards a 20 per cent. basic rate of income tax. The Budget that my right hon. and learned Friend delivered on Tuesday enshrined all of those objectives. It leaves people and business with more of what they earn and spends more on what they care about.
The Budget reaffirms our overriding commitment to providing the framework and conditions under which enterprise and wealth creation can flourish. It cannot be said too often that businesses and individuals, not


Governments, create wealth. We need to encourage and reward their hard work and prudent savings, which are the foundations for future investment.
All 26 million income tax payers will gain from the income tax cuts that my right hon. and learned Friend announced on Tuesday. Savers will benefit from the reduction, from 25p to 20p, of tax on savings income. The package of help for business announced by my right hon. and learned Friend addresses business concerns directly, which is perhaps why it was so warmly welcomed by the Confederation of British Industry.

Mr. Peter Hain: On the concerns of business, why has the right hon. Gentleman reneged on the commitment given by his predecessor to reduce the Post Office's external financing limit and instead doubled it so that an extra £400 million will be taken out of the Post Office? That will increase prices for the ordinary customer and massively restrict the Post Office's ability to modernise and invest in new sorting equipment and so forth. Is that not just another hidden tax and an example of the Government giving with one hand and taking away with the other?

Mr. Lang: My right hon. Friend the Deputy Prime Minister did not give the firm commitment that the hon. Gentleman suggests. He gave an indication of what the Government's aim would be and expressed the hope that it would be possible to make progress. We have indeed made progress with the arrangements that my right hon. Friend set out last May.
We have abolished the capital expenditure limit with its associated scrutiny of individual projects. We have a new corporate planning process. We have said that we shall consider moves by the Royal Mail into adjacent markets and that we shall continue to build on that progress. It is surely beyond reason to expect that the Post Office, a major organisation, should be entirely exempt from the sort of budgetary pressures that afflict every other public service and Government Department. That is the approach that my right hon. Friend took.

Mr. Hain: I am probably testing the right hon. Gentleman's patience, but may I remind him that his predecessor imposed an external financing limit for the coming financial year which the right hon. Gentleman has now increased by £120 million? The Post Office cannot borrow on the open market because the Government will not let it. It has to invest from its own resources. Why is the right hon. Gentleman denying it the ability to do so and therefore denying it the ability to compete in Europe and become the best Post Office in Europe, not just the best Post Office in Britain?

Mr. Lang: We have an extremely good record on the performance of the Post Office. It is certainly not being starved of investment. It is an organisation which is spending, and should have the scope to continue to spend, at double the rate that it spent when the Government came into office. At constant prices, it spent a total of £800 million in the five years Labour was in power. Between 1989 and 1994, that figure increased to £1.7 billion. We have a good record on the Post Office and I am anxious to build on it as soon as circumstances allow.
I shall now revert to the benefits for business that my right hon. and learned Friend the Chancellor announced in his Budget. We have cut employers' national insurance

contributions by £500 million a year from April 1997 and we have cut the maximum real increase in business rates under the relief scheme by 2½ per cent. compared with last year's Budget, but the request that I hear most often from business is for low inflation.
All the major business organisations called for the safeguarding of the stable macro-economic environment that the Government have put in place. We have set a firm target for underlying inflation and we remain resolved to drive it down and keep it down. Inflation has now been below 4 per cent. for more than three and a half years and below 3 per cent. for much of that time. That is the best performance for 50 years. We are breaking the inflationary culture that the policies of the Labour party did so much to engender.
The stable and profitable climate for business that we are delivering is the surest way to encourage investment in our economy, but we have also been engaged in a programme of long-term structural change to the United Kingdom's economy. It involves reducing burdens on business, extending the scope of market forces, promoting competition at home and abroad and helping business to help itself.
We have at all times been concerned to create an economic climate that encourages and rewards enterprise. We recognised long ago the importance to our economy of a thriving small business sector. It is the backbone of our economy and the engine of growth and new jobs for the future. Today, there are more than 1 million more small businesses than there were in 1979.
Small business remains at the heart of our agenda, where it has always been. While the Labour party was opposing enterprise—or, as now, simply talking about it—we have, year after year, brought in measures to help small business. Through changes to PAYE, national insurance, income and corporation taxes, VAT, accounting and auditing requirements; and with loan guarantees, venture capital trusts and investment schemes and a host of other measures, we have shown our commitment to small business and we will continue to do so.
We have invited small firms representative bodies to organise a series of conferences to involve small businesses more directly in generating future policies to help them. We are participating fully in that programme, which will culminate in a national conference to be held in London next March.
We have established a new team of small firms Ministers across Whitehall. They are responsible for ensuring that the interests of the sector are taken into account in the development of all aspects of Government policy. The Budget contained a wide range of measures further to boost small businesses and enterprise. It cut taxes on profits. The reduction in the small companies rate of corporation tax will help 300,000 small companies, while the cut in the basic rate of income tax will reduce the tax burden on a very large number of unincorporated businesses.
The Budget helped small firms with the cost of business rates following revaluation. More than 800,000 smaller properties will benefit from the maximum real increase being cut from 7½ per cent. to 5 per cent. It cut the qualifying age for capital gains tax retirement relief, thereby encouraging and rewarding entrepreneurship, and


significantly extended the threshold before which assets will be liable for inheritance tax. It simplified the tax system and raised the VAT threshold.
However, it is not just through the taxation system that we are helping small business. We are also putting in place the most extensive and effective infrastructure to assist small business that the country has ever had. Business Link is a central element in our strategy to help small firms. It is reaching out to companies with a will to grow by providing long-term support tailored to the needs of individual firms. For the first time, local firms have a simple route to a comprehensive range of high-quality, integrated business support services in areas such as export planning, finance, design, innovation and modern technology.
More than 70 per cent. of the Business Link network is already in place, and by next April we expect some 250 outlets to be open, covering the whole of England. Scotland and Wales are developing similar networks known as Scottish Business Shops and Business Connect Wales.

Mr. Max Madden: The President of the Board of Trade has been talking at some length about all the help that the Government are giving small business. Does he include in that the proposal to introduce substantial penalties on employers who employ illegal entrants? Will not the inevitable consequence of that measure be that many small business people, fearful of such penalties, will refuse to employ anyone who comes from abroad, particularly anyone from an ethnic minority?

Mr. Lang: I can assure the hon. Gentleman that, as with all the other measures that the Government introduce. the particular circumstances of small businesses will be taken into account.
Business has already given Business Link an overwhelming thumbs up. More than 4,000 businesses a week are using the network, and 95 per cent. of customers surveyed have expressed satisfaction with the service. The Budget provided funding to enable the Business Link network to be completed. The Budget has also allowed me to increase the funding for its services so that it can meet the demand from business for integrated, world-class business support services.
Bad regulation bears down disproportionately on small firms. Business men and women must be free to concentrate on creating wealth rather than filling in forms. We have sought out unnecessary regulations which raise prices, destroy jobs and stifle innovation and choice. Business has been brisk. We have found more than 1,000 such regulations and we shall have amended or repealed more than half of them by the end of the year, but we are by no means content to rest there. We are determined to continue to look positively at deregulation, particularly where regulation impinges on small business.
We shall continue to oppose the imposition of new burdens on small business. The policies of the Labour party—the national minimum wage, the social chapter and its payroll tax—would place intolerable new burdens on small business. It is clear that the needs of small business are the last thing on Labour's mind.
Deregulation and our policies to encourage enterprise have been essential elements of our long-term agenda to transform the competitiveness of the British economy.
The Government's privatisation programme is also a part of that agenda, Privatisation and liberalisation have revitalised huge swathes of the economy that lay moribund under state ownership. The success of our policies is reflected by the increasing number of countries of all political persuasions which are now following our lead. It is only in the British Labour party that abject short-termism and socialist dogma still prevail.
What is the Labour party's response to the growing success story? Its response is to seek revenge in the form of a windfall tax. At the time of the utilities' privatisation, the Labour party claimed that they were doomed to failure. Now that they have achieved greater efficiencies and success than Labour thought possible, Labour will penalise them with a windfall tax—which would be unfair, capricious and penalise success. It would also be retrospective.
Retrospective taxation destroys incentives to improve performance and make profits. If there are no profits, there are no funds for investment. If there is no investment, the quality of services in the utilities will be under threat and consumers will end up facing price increases rather than continuing to enjoy the downward trend in prices. Consumers would suffer as the quality of services fell and their cost rose.

Mr. Michael Clapham: The Secretary of State mentioned that the utilities had forced down prices. Is he aware that the price of electricity to large users has not changed at all? Can he tell us what he intends to do about that, as it clearly affects British competitiveness?

Mr. Lang: I shall provide figures on prices in a moment. For the moment, let me continue on the topic of the windfall tax to which the Labour party is so committed. Indeed, it is one of the few identifiable commitments that we have managed to get out of the Labour party.
The Labour party implies that the windfall tax is a free tax and that no one will get hurt. There is no such thing as a free tax. I have already mentioned the cost to consumers of the tax, but it would also be a betrayal of all the investors in the privatised companies, because they would have to pay for it. It would be a tax on millions of small individual investors. It would be a tax on the pension funds and the life assurance companies on which individuals rely for their future security. They are the people who would be betrayed by the Labour party, and all because Labour needs to find money to finance its desires for higher spending. A windfall tax has nothing whatever to do with fairness.
A windfall tax is by definition a one-off tax. It cannot be used for recurring spending programmes, yet the Labour party plans to spend the proceeds of the tax not only year after year, but on 10 separate policy commitments. The Labour party's sums simply do not add up.
Let us examine the successes of the privatised industries, which Labour policies would put at risk. The regulatory system has turned the past profits of the utilities into price cuts for consumers. Telecommunications prices are down more than 35 per cent. in real terms since privatisation. With liberalisation and growing competition, customers can expect to continue to benefit from lower prices. Domestic gas


prices, excluding VAT, are down more than 23 per cent., and industrial gas prices are down 40 per cent. since privatisation. The deregulation of the gas market, which comes on stream next year, will mean that customers can expect prices to fall further still. Domestic electricity is down by 7 per cent. Next year, through tighter new price controls, the flotation of the National Grid and the phasing out of the nuclear levy, customers can expect, on average, about £90 off their bills.
Our telecommunications, electricity and gas prices for industry are among the lowest in Europe, and they are helping industry in this country to win. The privatised companies are delivering not only lower prices but better services. More than 95 per cent. of British Telecom's telephone boxes now work, and there are 50 per cent. more of them. Before privatisation, 250,000 people were waiting to have a telephone installed; now there are no waiting lists. Utilities now guarantee standards of service, and their guarantees are backed up by compensation. They have codes of practice on the services that they deliver to elderly and disabled customers.
The taxpayer has also enjoyed benefits from privatisation. Under the Labour party, nationalised industries cost taxpayers £50 million a week, which was more than £120 a year for every household in the country. Today, the privatised utilities contribute £55 million a week to the Exchequer.

Mr. Paddy Tipping: The President of the Board of Trade has not mentioned the privatised water companies. What would he say to Severn Trent Water which, the day before the Budget, announced an increase in profits of 75 per cent. to £160 million, but offered its customers a rebate of only £4 a year? That is not value for money for the customer.

Mr. Lang: The hon. Gentleman seems to overlook the fact that the water industry has for a long time needed increased capital investment. Like all publicly owned utilities and nationalised industries, it has been starved of resources over the years. It is now in a position to raise the necessary money through the private sector and in the market. Yorkshire Water plans to invest no less than £2.5 billion over the next 10 years. Such an upgrading of the system could not have been contemplated under the previous arrangements, but can be now.
The privatised utilities have benefited not only consumers, shareholders and the Exchequer, but the economy. The privatised industries are investing in modern infrastructure that will benefit Britain for decades to come, and they have had an unparalleled record on investment since privatisation. More than £25 billion has been invested by BT on modernising the network and installing new technologies, and more than £4.5 billion was invested in telecommunications last year. Fifteen billion pounds has been invested in water to date, which answers more specifically the question asked by the hon. Member for Sherwood (Mr. Tipping). Our water companies are now delivering some of the cleanest water in Europe. By comparison, under the Labour Government, capital investment fell in electricity, gas, telecommunications and water.
Against that background, it can be said with certainty that independent regulation of the utilities. operating at arm's length from the Government and with competition introduced wherever possible, has worked well. It

provides incentives for companies to improve their performance and mechanisms to ensure that customers benefit from the improvements. The regulators have also required the utility companies to meet demanding new standards of service. As a result, customers have benefited in respect of price and quality of service.
There is never a shortage of ideas for changes to the regulatory system. Where those changes would help the regulators with their job and improve public understanding of what is being done, the regulators themselves are quick to respond.
The regulators have wide powers under existing legislation to introduce changes to regulation, but they are all putting increasing emphasis on consultation before taking major decisions. They actively encourage public debate through consultation papers, explanatory reports and discussion at conferences and other open occasions. The wider involvement of interested parties raises the quality and integrity of decision making as the regime develops.
Some of the regulators have appointed, or are considering the appointment of, groups of advisers to help with specific issues or for continuing advice. That is a sign of a flexible and responsive regulatory system. In addition, as competition develops—for example, in the telecommunications market—the regulator seeks to remove detailed interventionist rules. That will allow companies to respond more flexibly and innovatively to customer needs and market developments.
The current structure is highly adaptable, so there is at present no case for fundamental change. As I said, the regulatory system is in an evolutionary phase. The process will no doubt continue, and rightly so. The Government will certainly continue to keep the system under review to ensure that it reflects the developing market.
As the system evolves, however, it will build on a record of solid achievement. Independent regulators and increasingly tight price formulae, with an incentive element built in, have been delivering impressive results to customers and developing impressive utility companies at the same time, but competition rather than regulation is the key to even greater improvements.
There is no doubt that there is scope for more competition and, therefore, more consumer choice, especially in the energy and water sectors. Competition between suppliers is already a fact of life in telecommunications and for medium and larger users of electricity and gas. It has produced clear benefits, which are important for the international competitiveness of British industry.
We are determined to press ahead with the further opening up of the markets. The first phase of the introduction of competition to the domestic gas market will take place next year, with full competition in 1998. 'The electricity industry is also preparing for full competition in 1998. Also in 1998, all users of electricity and gas will have the opportunity to benefit from competitive choice—on top of the large reductions in energy prices which they have already experienced or which are in the pipeline.
There is also scope for extending competition in the supply of water and waste water services, in the first instance for larger users. Consequently the Government are working on proposals with the Director General of Water Services and will publish a consultation paper early


next year. This all shows that, as a result of the Government's policies, we have a dynamic evolving utilities sector which is increasingly delivering, at lower cost than before, the services that customers want.
We have not restricted our efforts to deregulate and increase competition to the private sector.

Mr. Tim Smith: Is my right hon. Friend aware that his announcement that electricity customers are likely to benefit from reductions of, on average, up to £90 in their bills next year is extremely welcome? What effect does he expect that and, in particular, the £50 National Grid rebate, to have on the retail prices index?

Mr. Lang: I can, with confidence, say that it will drive the RPI downwards. It is more difficult to calculate the precise effect that it will have on the RPI. In the long term, the price reductions that have been coming through in all the utilities that I have mentioned will undoubtedly be of great benefit in reducing the cost of living.
The public sector has also been opened up to the rigours of the marketplace through the private finance initiative. The PFI brings together the public and private sectors to the advantage of both. It brings the enterprise and discipline of the private sector into areas which have, until recently, been regarded as the domain of the public sector. The state cannot and should not try to do everything. We need to find new, innovative and more efficient ways of delivering public services and major capital investments. The PFI enables the Government to move away from being the provider of services to being an intelligent purchaser of services for the taxpayer.
The PFI will generate increased investment in infrastructure and public services. The Government are on course to let contracts worth £14 billion over the next three years—£5 billion this year alone. Substantial progress has already been made across a range of Government activities. For example, a deal was signed earlier this year with GEC Alsthom to supply a new train service for the Northern line. The first tranche of contracts for design-build-finance-operate road projects is due to be signed shortly. A further £500 million-worth of privately financed road schemes was announced by my right hon. and learned Friend the Chancellor on Tuesday. The net result will be the better and more efficient delivery of services.

Sir Michael Grylls: I am listening carefully to what my right hon. Friend is saying about the PFI, which is a marvellous innovation that should be useful. To help it work more efficiently and speedily, will my right hon. Friend consider bringing in outside business men and women to advise Government Departments as they negotiate contracts? Experience seems to show that, generally, civil servants are not very good at negotiating. If people were brought in from the private sector, the PFI might get going much faster.

Mr. Lang: My hon. Friend makes a positive suggestion and I am glad that my right hon. and learned Friend the Chancellor is sitting on the Front Bench to

hear it. We share the objective of wanting to ensure as substantial and effective a take-up of existing PFI opportunities as possible.
As for the issues that we are considering in the Budget debate, we listen and wait in vain for any sign of the Labour party's policies. The Labour party does not have a view on any issue that arises in the debate. It has no view on taxation; it has no view on the level of interest rates; it has no view on inflation.
Perhaps the right hon. Member for Derby, South (Mrs. Beckett) will enlighten us all today. We know that, in general terms, the Labour party wants to raise spending and introduce more policies that would cost money but, although it generally wants lower taxes, it abstains on my right hon. and learned Friend's Budget when it comes to resolving the issue. What a wonderful posture of high-mindedness and principle the Labour party adopts to seek to persuade the electorate that it represents their interests.
We know that the Labour party wants to raise spending, but we know that it is not prepared to face up to the issues of funding; we know that it wants to reduce taxes, but when we introduce proposals to reduce taxes across the board it abstains. Its sole interest is in party political advantage instead of the national interest. Why else would it take every opportunity to talk down the country? I should like to offer it a few facts that will help it to stand up for the country for a change.
Our gross domestic product per head is 10 per cent. ahead of that of Europe as a whole. During the past 15 years, our growth has been faster than the average growth of the European Union. Our living standards have risen by 40 per cent. since 1979, whereas they rose by only 1 per cent. under the Labour Government. This year's Budget will help further to increase that figure of 40 per cent. With the fastest productivity growth rate, we have closed three quarters of the gap in manufacturing productivity with France and Germany since 1979—a gap that widened under the Labour Government.
Since 1979, total investment and total investment in the business sector have risen faster than in France, Germany or Italy. The 1980s were the first decade since the second world war in which our economy grew faster than those of Germany and France. The UK now has a higher proportion of its population of working age in work than any other major European Union country.
Those are some signs of the progress that has been made in recent years under this Government. We have achieved success through the huge structural changes that we have made to our economy—making it more competitive and freeing up enterprise. Britain is now well placed to build on the significant progress that has been achieved.
My right hon. and learned Friend the Chancellor has delivered a good Budget for business. He has delivered a Budget that furthers the competitive gains that we have made during the past 16 years. He has delivered a Budget that reinforces the Government's commitment to permanently low inflation and sustained economic growth. He has delivered a Budget that reduces taxes and provides incentives for saving.
The Budget provides support to small firms, both through taxation and through resources for practical assistance. It reflects the long-term economic strategy of


the Government: low inflation; incentives for enterprise; firm control of public expenditure; and a climate for sustained growth. I commend it to the House.

Mrs. Margaret Beckett: Every Member of Parliament now knows that this is a dishonest Budget. We do not need a sophisticated analysis of the detail to show us that—we have a simple parliamentary litmus test. There have been six statements in two days and two Budget debates that have barely started before 6 pm. If the Government were really so proud of the Budget, they would not be trying so hard to hide it.
What we needed on Tuesday was a Budget for Britain, a Budget to secure our country's future, a Budget to promote and sustain investment in that future. What we received was, unfortunately, what we feared: a Budget, the main—probably sole—purpose of which was to secure the Conservative party's future. The Budget reinforced our criticism of the Government's lamentable record on investment.
The Budget reveals that the Conservative party is beginning to resemble a clapped-out old car. Its steering has gone and it can only lurch to the right, the tax has run out and it has been burning oil, North sea oil, for years—£128 billion worth of oil, to be exact. It is no wonder that the Tories cannot flog the old banger to the people of Britain. We can imagine the advertisement in the paper: "16 years old; one not-too-careful lady owner; split down the middle; none of the seats is safe."
The Budget shows, yet again, a Government praising themselves for their aspirations and ignoring their record. How do we judge the worth of those aspirations? First, in the light of the Government's past record and secondly, in the light of their present intentions as revealed in the Budget. The Chancellor told us several times in his speech that he wanted to make Britain the enterprise centre of Europe. This week, the Government's efforts to promote enterprise, of which the Secretary of State has just been bragging, have produced some interesting effects. I think that we would all agree that it takes enterprise and flair to run out of water in Yorkshire. It takes unbelievable acumen to be involved in a business that supplies only one product, to fail to provide that product and still to increase profits by 50 per cent. Is that what the Government mean by "the enterprise economy"?
That is not, of course, the only example of the Government's record on enterprise. The National Engineering Laboratory was recently privatised. What did the sale raise to help fund the Government's programme? It appears to have raised less than nothing—to be precise, minus £1.5 million. Far from raising money from that sale, the Government appear to have paid someone to take the NEL away.
Another money loser, as well as a vote loser, is the privatisation of Railtrack. It now appears that Railtrack, with assets estimated at £6 billion, might be sold for as little as £1.5 billion—£1 billion less than was anticipated—in the rush to get it on to the stock exchange by April 1996, a rush that almost certainly has far more to do with the need for it to contribute to the Government's accounts than with sound business management of the sale.
A recent analysis of Railtrack's accounts by the Independent suggests that the company may have set aside more than £1 billion from its investment budget to repay debt and boost the balance sheet before privatisation—yet more evidence of the Government's failure on investment, to put alongside the use of £1 billion of public money to meet the costs of privatisation, money which could have been used for investment.
Then there is the privatisation of the nuclear power stations. Some disquiet has already been expressed about the general safety aspects and implications of that privatisation, and about whether the timetable might be somewhat tight, being driven by the Government's need for funds rather than the public interest. Now, that already tight timetable is rumoured to have been further curtailed because Railtrack's privatisation will not raise the sums anticipated, thus creating fresh doubts about safety.
That is probably also the privatisation that most evidently blows out of the water the Government's claim to be, and to be uniquely, the party that understands about how business should work, because that is the privatisation in which, most evidently, the Government are selling the assets and keeping the liabilities. It also blows out of the water their claim to be good stewards on behalf of the British people, because those are liabilities that, through their electricity bills, people have already paid to cover. Thanks to the Government's business acumen, we shall end up paying, not once, not even twice, but three times.
Before the original privatisation, the Central Electricity Generating Board held assets that more than offset its liabilities.

Mr. Michael Stern: Will the right hon. Lady give way?

Mrs. Beckett: Not at the moment.
However, when those assets were sold, the money was used to contribute to tax cuts and Nuclear Electric was left with £10 billion of unsecured liabilities. The non-fossil fuel levy was invented entirely—

Mr. Stern: Will the right hon. Lady give way?

Mrs. Beckett: Not at the moment. I am right in the middle of an argument. I know that the hon. Gentleman would not wish to interrupt it. The non-fossil fuel levy was invented entirely to cover those liabilities, again at the electricity customer's expense. It was in effect another tax. Nuclear Electric chose to invest much of the income from that tax, saying that it needed to ensure that it had future cash flow and assets to cover those liabilities. Those assets are now, in turn, to be sold again and the cash again used as a contribution to, and justification for, tax cuts, leaving the Magnox company once more with the unsecured liabilities.
Customers will have paid three times: first, through the earlier price levels to build up CEGB assets, secondly, through the non-fossil fuel levy used to rebuild them after privatisation and thirdly, to cover the liabilities that the Government said that those assets were twice supposed to meet.

Mr. Stern: The right hon. Lady has summarised the letter that many of us received from power unions to good effect. May I remind her, however, that when the Select Committee on Energy reported on exactly the matters to


which she now refers, it pointed out clearly and with factual backing that it was not the case that the CEGB had provided for those liabilities, and that it was because the CEGB had not even calculated, let alone provided for, those liabilities that the nuclear power stations could not be included in the privatisation?

Mrs. Beckett: I understand that the Select Committee continues to examine those matters. I take the hon. Gentleman's point when he says that he would argue that the assets of the CEGB would not wholly have covered those liabilities, although I believe that, as it is so difficult to calculate, it is hard to say whether that is wholly true. However, that does not alter at all—as I believe that the hon. Gentleman conceded—my basic argument that the CEGB did have assets that would have contributed towards meeting those liabilities, and those assets, like the ones that replaced them, have been destroyed by the Government, leaving the liabilities in place. I repeat the main point of those observations, which is that that is a clear sign of what we should think of the Government's business acumen.
However, the Government's appalling record in protecting and advancing the interests of the people is, in its own way, wonderfully consistent. Alone among the G7 countries, alone in Europe, the Conservatives formed the Government who had the windfall benefits of North sea oil—benefits that they used to cover the consequences and costs of their failure and incompetence.
I listened today to the President of the Board of Trade going on about the Government's investment record, as Conservatives so often do—usually not very accurately, but never mind—and comparing it with the investment record of the last Labour Government, which was, of course, hit by a fourfold or fivefold increase in the price of oil, something that the present Government have not yet sustained. What I never hear the Government mention, and what the President of the Board of Trade slid over today, is the fact that the Conservatives have had benefits worth £128 billion at today's prices from the North sea alone. That is the equivalent of about £22 million a day for every single day of the 16 years that the Conservatives have been in office.
In addition, the Conservatives have had, and squandered, the proceeds of privatisation—what the late Harold Macmillan called "selling the family silver"—£80 billion in today's prices. That is the equivalent of a further £13 million a day for every single day of the 16 years that they have been in office. The Conservatives have had £35 million a day for every day that they have been in power for 16 years; £35 million a day that no British Government will ever have again because they have squandered it; £35 million a day that they could have invested in Britain's future if, for 16 years, they had not put the future of the Conservative party first.
That process of squeezing public assets and squeezing the public's purse goes on. I was very interested in the observations that my hon. Friend the Member for Neath (Mr. Hain) made about the attack on the Post Office. He drew attention to the fact that the Treasury will double the amount of cash that it will take from the Post Office—an additional £400 million during the next three years—making a total of £1 billion during that time. 
The President of the Board of Trade implied that that was not especially unexpected; at least he disputed with my hon. Friend the Member for Neath the statement of the then President of the Board of Trade, the right hon. Member for Henley (Mr. Heseltine), on 11 May 1995. I just happen to have a copy of statement about my person. The then Secretary of State said:
I am prepared to agree that in future we shall aim to set the EFL at about half the Post Office's forecast post-tax profit. I hope to make progress in that direction this autumn."—[Official Report, 11 May 1995; Vol. 259, c. 885.]

Mr. Lang: Hope.

Mrs. Beckett: The Secretary of State draws to my attention the word "hope"—and no doubt also the word "aim". I believe that it is clear to all of us that words in the mouth of Ministers in the present Government mean nothing, and that is one of many examples—as is the word "promise".
However, one thing that is also clear is that that further impost on the Post Office, taking as much from it in the next three years as the Government have taken in the past 10, will have two effects. First, it makes an early increase in postal charges almost inevitable—a Tory stamp tax on the ordinary people and the businesses of the country. Secondly, it means that much-needed investment in the Post Office will have to be shelved. It also probably renders the Post Office open to competition from elsewhere in the European Union.
Most commentators say that this year's was a neutral Budget. Some give the Chancellor a feeble cheer for not going more blatantly for cosmetic tax cuts, but it was a cheer that he did not deserve. We know that, on the latest Red Book forecasts, the total tax burden as a proportion of gross domestic product continues to be planned to increase until the end of the century. We all know that in April next year a typical family will continue to pay £670 a year more in tax than it did when the Conservatives were re-elected in 1992 on a platform that promised overall tax cuts. They did not aim, they did not hope, they promised tax cuts, and then delivered 21 tax increases, equivalent, as the Chancellor has acknowledged, to 7p in the pound on the basic rate of tax.
It is forecast that the public sector borrowing requirement, the deficit in the Government's finances, will be down to about £22 billion next year. Last year, the Chancellor said that it would be below that by now. Growth was forecast to reach 2.75 per cent. this year and 3 per cent. next year. Last year, the Chancellor promised that it would be higher than that by now. Meanwhile, back in the real world, year-on-year growth is running at around a meagre 2 per cent. Last year, the Chancellor forecast investment growth at 5.75 per cent.; now he says that it will be 1 per cent. Growth is down on his forecast, and so is investment. What is up on his forecast? Inflation, the trade deficit, the balance of payments deficit and the deficit in public finances—the public sector borrowing requirement. That is all part of the Government's record.
What are the Government's present intentions? Before the Budget, the CBI said that we needed a Budget for investment—a Budget to promote investment in industry, and to sustain investment in education and training. It also


said that what we did not need was a Budget in which cuts in income tax were offered at the expense of investment in infrastructure.

Mr. Tim Smith: The CBI welcomed the Budget.

Mrs. Beckett: The hon. Gentleman says—from a sedentary position, no doubt exercising due caution—that the CBI welcomed the Budget. Indeed, the CBI put out a very balanced press release. I think the Secretary of State said that it had given the Budget a warm welcome; that is going a bit over the top, although it does use the words "we welcome". It also says:
Public borrowing is higher than we had hoped for … We will need to see the details to assess this"—
the public capital expenditure cut, that is—
in full.
The CBI also says:
it is vital that the resources available for … transport … education and training and export support are at least maintained … the Private Finance Initiative is coming on stream too slowly to make up for the cuts in public capital spending in the Government's present plans.
I would not call that a warm welcome.

The Minister for Trade (Mr. Anthony Nelson): What are the Opposition's proposals?

Mrs. Beckett: I would be grateful if the Minister for Trade would be quiet. He knows perfectly well what our proposals are; in fact, the Secretary of State spent some time attacking them in his speech.

Mr. Lang: The right hon. Lady has missed out one or two points in the CBI's press release. It welcomed
the fact that the Government has broadly stuck to the prudent economic line
that it had recommended. It was
pleased that the Chancellor appears to have limited tax cuts to reductions in spending and resisted the temptation to go for excessive tax cuts.
As for public borrowing, the CBI was
satisfied that it still appears to be on a downward path.
It welcomed
the priority the Chancellor gave to education spending".
In the tax reductions, it was
pleased to see some specific measures such as help given to small businesses".
As for personal taxation, it stated:
we welcome the raising of thresholds and the broadening of the 20 per cent. band.
I think that that is a pretty warm welcome.

Mrs. Beckett: The Secretary of State is unduly defensive—perhaps revealingly defensive. I made the very point that this was a balanced press release that welcomed many elements in the Budget; I then drew attention to the reservations expressed by the CBI. The right hon. Gentleman knows perfectly well which are the most important points. I am dealing with the measures that the CBI called for—and the right hon. Gentleman is well aware that it was given none of those measures.
Last year, bodies such as the CBI, the chambers of commerce and the Engineering Employers Federation called on the Chancellor for significant capital allowances to stimulate investment in new plant and machinery. This

year, those bodies called on him again for such capital investment. They got zilch. The Secretary of State was too busy telling the CBI that it was its duty to come to the rescue of the Conservative party—to remember whose side it was on, as he so gracefully put it—to worry about helping it to come to the rescue of a faltering economy.
Both the Chancellor and the President of the Board of Trade are fond of quoting figures to the effect that investment has increased substantially over the past year; but that one-year increase is quoted to disguise how low is the level to which investment has been flattened under the present Government. In fact, total investment in 1994 was more than 10 per cent. below its level in 1989, before the recession.
The share of the economy taken by investment has fallen for six years in a row. The average level of investment between 1979 and 1993 as a share of the economy has been the lowest in all the 18 countries of the G7 and the European Community. As the Bank of England pointed out this summer, investment is 20 per cent. below the level that it reached in previous recoveries. I refer to investment in general, to support for investment of the kind sought by the CBI and to investment in education. The Budget told us that funding for education would be as much as local authorities are spending this year, and that there would be cuts in funding for further and higher education and training, including funds for training and education councils.
Nor have the Government protected investment in infrastructure, as the CBI requested. They have savagely cut their own investment, public sector capital spending, with cuts amounting to £3.9 billion by 1997–98. With typical sleight of hand, they have implied that the private finance initiative will fill the gap. It has not so far, and unfortunately it probably will not do so in the future. The Government have already cut their own investment by about £2 billion, and over the same period the private finance initiative has raised only about £500 million. Already, we have a net reduction of £1.5 billion in investment in infrastructure.

Mr. Nigel Forman: It seems a long time ago, but I seem to remember that the right hon. Lady was a Minister in the last Labour Government. I believe that she was there at the time when the Labour Government cut various forms of public sector capital expenditure by more than any other post-war Government. Does she repent?

Mrs. Beckett: The hon. Gentleman was clearly not awake when I gave the figures for the investment funds that have been available to the present Government. Yes, I do regret the fact that the last Labour Government could not proceed with all their capital spending programmes—although what the Government say about that, like so much of what they say, is often completely untrue. The Secretary of State said, for example, that investment in water had been cut. That is not true. The plans that we hoped to implement were not entirely fulfilled, but investment was not cut; indeed, it rose under the last Labour Government. I suggest that the hon. Member for Carshalton and Wallington (Mr. Forman) check his facts.
Let me repeat a point that I am happy to repeat—a point that I intend to repeat at every opportunity that I get between now and the next general election. As the Secretary of State did, and as they all do, the hon. Member


for Carshalton and Wallington compared the record of the last Labour Government, who were hit by an oil price increase—[Interruption.] As recently as Tuesday, the Chancellor said that the reason why inflation had gone up a bit this year was an increase in commodity prices. If that excuse is valid for the Chancellor, it must have some relevance to what happened to the last Labour Government. What we never had, and what no Government will ever have again—thanks to the profligacy of the present Government—is £35 million a day of investment to put into the economy.

Mr. Richard Spring: Will the right hon. Lady give way?

Mrs. Beckett: No.
To compare the investment record of the last Labour Government with that of the present Government—even truthfully—is ridiculous. It is not comparing like with like.

Mr. David Congdon: Will the right hon. Lady give way?

Mrs. Beckett: I should like to make progress. I shall give way later if I have time.
What the Government intend is all too clear. I was not able to trace the quotation before today's debate, but I think that I am right in saying that they have implied that the private finance initiative was first introduced to promote the programme of capital investment. It would be used to supplement and extend that programme; the Government denied that it would be used to replace it, and to make up for cuts in Government capital investment. Not only has the latter happened; it has been explicitly advocated—in the Red Book, and in the Chancellor's speech on Tuesday—that the PFI should replace, rather than supplement, public capital investment. That, too, is something that business and industry have sought to avoid.
The Government claim—as they have today—that economic success is already ours, boasting about our trade performance under them. Indeed, that performance has been record-breaking. In 1983, we saw the breaking of an outstanding historical record, with the appearance of the first trade deficit in manufactured goods since the industrial revolution—a record that the Government have managed to maintain every year since then. The trade figures for October reflect another record-breaking Government economic performance—a £1.2 billion non-EC trade deficit. That is the worst figure since the series began.
The balance of UK visible trade in 1994 was a deficit of £10.5 billion, and the balance of trade in manufactured goods showed a deficit of £7.5 billion. We currently have a trading deficit with France, Germany, Italy, Sweden, Denmark and Finland. Incidentally, under the last Labour Government we had an average £4 billion surplus on trade in manufactured goods.
It is hard to see how all that leads the Government to claim that they are making Britain the enterprise centre of Europe. We are down to 18th in the world prosperity league, behind our main European competitors; we are bottom of the league in growth and investment since 1979 among the G7, and 20th out of 24 OECD countries in job

creation. It all flies in the face of what the Government say about our economic record, and what they say about jobs—such as the Secretary of State's comment that job insecurity is a state of mind, and that the reality is different. As we pointed out a few days ago, more than 8.5 million people or 26 per cent. of the work force have directly experienced unemployment since the last general election.
Today, we have issued a regional breakdown of those figures that shows that the highest level of unemployment for men was in Greater London at 41 per cent., followed by the northern region at 37 per cent., and then the north-west. Even the best figure, for the south-east excluding London, is 27 per cent.—more than one in four. That is a truly shocking statistic.
The denial of the existence of job insecurity, like the Government's record on tax and public spending and like the Budget, is further evidence of what people are now seeing with greater clarity than ever before. The Government's record is one of dishonesty and sleight of hand. We can see that in the way that they give a little with one hand, but take much more with the other—7p up and 1p down. We can see that in the Government's policies on investment and industry and commerce. We can also see that in what the Government have said about small businesses.

(The Chancellor of the Exchequer) Mr. Kenneth Clarke: The right hon. Lady has returned to the question of taxation and public spending and she has taken the subject rather broadly. Can she give an example of a tax proposal that I have made which the Opposition intend to vote against? Is there an area of public expenditure that the right hon. Lady proposes to increase? If so, will she identify it and say by how much?

Mrs. Beckett: My hon. Friend the Member for Oxford, East (Mr. Smith) may be in a position at the end of the Budget debate to say how we shall vote on the different resolutions. I have not studied them myself. We shall vote against the overall impact of the Budget. [Interruption.] The Chancellor knows that decisions have to be taken on individual resolutions. [Interruption.] Does the Chancellor want to hear the answer to the question? We do not intend to vote against the cut of 1p in the rate of income tax, because we think that the public have suffered enough thanks to the Government's incompetence and deceit. We intend, however, to vote against the Budget overall.
The Chancellor asked me to identify an area of public spending that should be increased and say whether I would make a commitment to that increase. No, I will not. The Chancellor must know—he always says so himself—that such decisions can be made only in the full knowledge of the facts. The Opposition are able to judge the facts only through the prism of what the Chancellor chooses to tell us. We would be unwise to take his word for anything, as the President of the Board of Trade has demonstrated today by telling us that what his predecessor as President of the Board of Trade said in May and June was absolutely meaningless. That does not encourage anyone to rely on what a Minister says.

Mr. Spring: Answer the question.

Mrs. Beckett: I have already answered the question. The hon. Gentleman is too busy heckling to listen.
The Chancellor raised the VAT threshold for small businesses by only £1,000, less than half the rise necessary to keep pace with inflation. He did not mention that that rise means that 14,000 more small businesses will be drawn into the VAT net over the next three years. He also reduced employers' national insurance contributions by 0.2 per cent., saying that that would
make it cheaper for businesses to create new jobs."—[Official Report, 28 November 1995; Vol. 267, c. 1064.]
However, the savings are so small that only a firm that employs more than 500 people will be able to employ a single extra person. The measure, therefore, does not do anything for small businesses and that is particularly sad because both sides of the House agree that small and medium-sized businesses have the most potential for job creation.
Although the capping of business rate increases for small businesses at 5 per cent. is welcome, the increases are still above the rate of inflation. As always, the best advice for small business people as for everybody else is to read the small print—the Government have a record of giving with one hand and taking back with the other.
The central boast of the Budget is that the Government will make us the enterprise centre of Europe—by cutting investment in infrastructure, and cutting investment in people. That is enough to make a cat laugh, but it will make anybody who cares about our future cry. The Government have betrayed the trust of the British people, robbed them of their inheritance, and jeopardised their future. History will not forgive them, and nor will the people whom they have betrayed.

Sir Terence Higgins: No Budget debate would be complete without reference to Iain Macleod's most famous dictum that Budgets that are well received on the day often look different on Second Reading of the Finance Bill; conversely, those that are not well received look rather good by Second Reading. My right hon. and learned Friend's Budget may well be a classic in the second category.
I confess that I was astonished by some of the headlines about the Budget. The Budget is complex and involves many measures, so I think that the press simply did not realise what much of the Budget was about. I feel that the Budget was excellent and well balanced.
The Chancellor was severely limited in what he was able to do. The move towards the 20 per cent. rate of income tax is very important and was approached in three separate ways: by widening the band far more than necessary to keep pace with inflation; by reducing the basic rate—1p off was quite enough, and I have not received a single letter suggesting 2p off; and by the important reduction of the rate of tax to 20 per cent. for people with savings income. That is particularly important for pensioners.
If the Chancellor had gone further, the reaction in the City would have been such that he would not have been able to hold out any prospect of a cut in interest rates, which is likely to be more important to the recovery than anything that appears in the Budget. Despite the stringent attitude that he has taken on public expenditure, a further cut would have had damaging effects. In particular, if the road building programme had been chopped any more,

programmes that have already advanced past the public inquiry stage would have been cut, with the consequent waste of nugatory public expenditure. That would be absurd.
The schools programme has provoked great concern in Sussex. My hon. Friend the Member for Lewes (Mr. Rathbone) referred to it earlier. I have had many letters about schools expenditure in West Sussex, rather overlooking the fact that the allocation of resources is for the county council to decide. The Chancellor said:
The Budget allows for spending on schools to rise next year. We have already increased spending per pupil by some 50 per cent. in real terms since 1979. We devote a higher proportion of our public spending to education than Japan, Germany or France.
He continued, in a crucial passage:
The plans that I am publishing today allow for an increase in spending on schools of £878 million. Within that, over £770 million will be channelled through the local authority settlement"— [Official Report, 28 November 1995; Vol. 267, c. 1058–59.]
Parents will rightly expect local authorities to carry that funding through to school budgets. They should ask their local authorities how the extra money for schools will be spent on their children. West Sussex county council, which is Liberal controlled, has been diverting money from education to its particular hobby horses and has then asked people to write to me to ask why education spending has been cut.
The expenditure side of the Budget is thus well balanced and it should be welcomed by the whole House.
When the Leader of the Opposition spoke after the Budget statement, his catch phrase was that the Government were giving with one hand and taking with the other—by contrast with the Labour party, which would take with one hand and give with the other. However, it would be a very strange Budget that took with one hand and did not give anything, or vice versa. Why the Opposition have latched on to that extraordinary catch phrase is mystifying.
I was intrigued by the emphasis that the Leader of the Opposition put on the fact that Conservatives are now writing to him. I had an extraordinary experience on my interview night the Friday before last when a constituent told me, "I wrote to the Prime Minister and got a reply from the Leader of the Opposition." I looked into the matter and that is what happened. I am still trying to get the letter back from the files of the Leader of the Opposition.

Mr. Donald Anderson: Does the right hon. Gentleman agree that, in so as far as the Leader of the Opposition had a catch phrase, it was, "7p up and 1p down"? Will he comment on that?

Sir Terence Higgins: The Leader of the Opposition should look at the entire period of Conservative government and, in particular, at what has happened to the real incomes and take-home pay of various individuals in different categories. One has to look at the Government's performance and, in terms of raising living standards—allowing for tax changes, inflation and everything else—it has been a remarkably good record. If I may say so, the catch phrase that has been bandied about is rather silly.
Let me refer also to the hon. Member for Dunfermline, East (Mr. Brown). The gimmick of a 10p tax band is totally divorced from the width of the band. Would it


apply to the first £1 of income or the first £60,000? The right hon. Member for Derby, South (Mrs. Beckett) is muttering to herself. Perhaps she can tell me how wide the band is. Without that information, it is a totally meaningless statement. It does not mean anything to promise a 10p band of income tax at the starting rate. In any case, that is not an efficient way of reducing tax. My right hon. and learned Friend the Chancellor has done more to help people at the bottom end of the scale by raising the basic allowance.
I happened to catch the tail end of the Budget broadcast by the hon. Member for Dunfermline, East last night. He stressed the importance of honesty in tax policies. He floated a remark about cutting VAT on fuel, but made no reference to the fact that under European legislation, the most he could cut VAT is from 8 per cent. to 5 per cent. His so-called honest broadcast gave the impression that there would be a massive cut or probably the abolition of VAT on fuel, so that did not seem very honest.

Mr. Stuart Bell: We are interested in the speech of the right hon. Gentleman as he is a former Chairman of the Treasury and Civil Service Select Committee. However, my hon. Friend the Member for Dunfermline, East (Mr. Brown) said not that he would reduce VAT from 8 per cent. to zero, but that he wished to reduce VAT on fuel from 8 per cent. to 5 per cent.

Sir Terence Higgins: Quite so. If that is what the hon. Member for Dunfermline, East said. I accept it as I heard only the end of the broadcast. If that is so, I apologise.
Having said that, I believe that the basic arrangements that were made for pensioners and those on social security benefit when we put VAT on fuel were beneficial. Unless the hon. Gentleman wishes to go further than he went last night and promises to reduce the rate of VAT on fuel and retain the compensation that the Conservative Government gave to those on low incomes and pensioners, his proposals were not entirely clear.
I now come to that old-fashioned expression, the Budget judgment, which has not been dealt with adequately. The PSBR has declined rather more slowly than we had hoped, because there has been some slow-down in the economy and consequentially, revenues have not risen as fast as they might have done and unemployment has not fallen as fast as we had hoped. That being so, the action that my right hon. and learned Friend the Chancellor has taken in regard to the PSBR is not inappropriate at this stage in the economic cycle. The rate of growth in the economy was lower than we had expected, so there is a case for running a level of PSBR that stimulates the economy. Therefore, I view the present level of the PSBR with relative equanimity. Inflation is clearly well under control and it is important to strike the right balance between controlling inflation and economic growth. Again, my right hon. and learned Friend got that pretty well right.
I return to my earlier point about the rate of interest. Had my right hon. and learned Friend increased interest rates, as the Governor of the Bank of England appeared to advocate some while ago, the PSBR would have been larger, so my right hon. and learned Friend was right to resist that and to emphasise the rate of interest as well as fiscal policy.
We have to put the Budget in a European context. In respect of the PSBR, I am worried about the enormous pressure to meet the convergence criteria under the Maastricht treaty. 'There are some real problems as they do not take into account the stage of the economic cycle in any particular country and it seems dangerous to say that it is suddenly all right at any particular moment. If the criteria are to mean anything at all, they have to be at a sustainable level, when the PSBR is consistent with moving a further stage towards economic and monetary union.

Mr. Stern: Does my right hon. Friend agree that another difficulty is that the Maastricht criteria for borrowing take no account whatever of the national assets against which the borrowing is undertaken, so in comparing borrowing rates in different countries, they totally ignore the capacity to borrow?

Sir Terence Higgins: Yes, indeed. It may well be that borrowing is an appropriate response at certain stages in the economic cycle, depending on the level of capital expenditure on which the Opposition are so keen.
The general pressure now being exerted in Britain and throughout Europe is extremely dangerous because it may well have a recessionary effect. Again, one has to balance the difference between the size of the deficits and the state of the cycle. I view with relative equanimity the action that my right hon. and learned Friend has taken. Of course, he is right to seek to reduce the public sector deficit. That must be appropriate, but perhaps the sense of urgency in some quarters has been somewhat overdone.
Overall, this is a well-balanced Budget, which should result in greater appreciation as the weeks go by and we debate the Finance Bill. It is a particularly good Budget from my constituency point of view. It is a good Budget for pensioners, for Worthing, for the economy and for Britain.

Mr. Donald Anderson: I shall give just a few reflections. I concede in a fairly broad-brush way on the Budget, and I hope that I follow in the spirit of the right hon. Member for Worthing (Sir T. Higgins). who is a distinguished former Treasury Minister and who gave a balanced view of the Budget speech.
Clearly, all Budgets are not simply exercises in economics, otherwise we would have simply a conclave of learned professors who would give us of their views. Different Budgets have different admixtures of economics and politics. I suspect that the fear of this year's Budget was that, as we approached a general election season, politics would he even more paramount than they' are in most Budgets. This year's Budget has to be viewed more than most in the context of its timing, the state of the country and the state of the Government.
The Budget speech. which now seems so long ago, met with rather different receptions on both sides of the House. I concede straight away that the dominant response among the Opposition, including myself, was relief because we have a keen appreciation of the Chancellor's political skills and, right until the end, we assumed that something dramatic would he pulled out of the hat, which might rescue the fortunes of his party and begin to restore a feel-good factor, even at this relatively late stage.
Our relief was expressed by, "Is that all?" There was certainly a feeling of relief on the Opposition Benches. We have, of course, respect for the Chancellor of the Exchequer as a political animal. We recognise also that he is a moderate man in a party that is becoming increasingly immoderate. The Conservative party is becoming increasingly hostile to Europe. We know that the right hon. and learned Gentleman has great experience and relative wisdom and seeks to avoid the essays in populism that the Home Secretary is wont to take.
I suspect that there was disappointment on the Government Benches. There was probably a feeling of great gloom. Drowning men and women were hoping that a lifebelt would be thrown to them. At the end of the Chancellor's statement, they realised that it would not be forthcoming.
In reality, we were presented with a relatively prudent Budget. Perhaps that was necessarily so. However great the temptation to be reckless, the Chancellor was mightily boxed in by economic realities. He was, for example, boxed in by the less buoyant revenues that he had not anticipated. He was boxed in also because the public sector borrowing requirement was greater than had been forecast and anticipated. His room for manoeuvre was far less than he would have wished at this stage of the political cycle.
It is only fair to say that there were a number of positive elements in the Budget. For example, it was relatively green in that it was to some extent environmentally friendly. Some of the key concerns of the average citizen were at least recognised, if not addressed. I am thinking of the priorities of public expenditure, including education, to which the right hon. Member for Worthing referred. On the basis of, "Now you see it, now you don't," I suspect that much of the so-called increased expenditure on education will evaporate rather rapidly when the figures are examined in detail.
We know that there is a crisis within the national health service. Only about 10 days ago the local newspaper in my constituency, which is not a traditional Labour party supporter, carried a headline to the effect that there is such a crisis. The article set out a series of major failures in health provision. The people know that and they recognise it. We know, of course, that there are some objective factors and increased pressures, which we all face. Many of the problems, however, result from the Government's ideological frolics.
Most Members recognise that law and order comes high on our constituents' agenda. We ignore the issue at our peril. It is suggested that an additional 5,000 police officers will be made available. That increase is only to be welcomed. Training will take some time, however, and there will be no immediate effect. There will be no political effect, apart from the declaratory effect, before the next election. There will he no fifth cavalry appearance out of the sunset to help the Government.
The Budget statement contained the recognition at last that something had to be done about the costs incurred by those who move into long-stay residential homes. Most of our people recognise that there is gross unfairness in the system. The Government's recognition of the problem must be welcomed.
Unfortunately, there were several regressive elements in the Budget. I have in mind the overall impact on the richest 10 per cent. of the population and on the poorest

10 per cent., and the punishing of victims in our society—for example, the swipe at single mothers and the reduction in housing benefit payments for those under 25 years of age. It is clear that the Government are labouring under a misapprehension. It seems that they think that youngsters leave their homes because they want to or because there are bosoms of families to which they can return if housing benefit is reduced.
The reality is that we live in an increasingly fragmented society. Much social distress will be caused by the reduction in housing benefit for the under-25s. I do not make the dramatic claim that we shall see a great expansion of cardboard cities. It is true, however, that young people at a vulnerable age, suffering from a lack of job opportunities, will find it increasingly difficult to find the few jobs that are available if they do not have steady addresses. The Government's action is deplorable. They may try to justify it according to their preconceptions, but their action does not tally with social and economic realities. I hope that they will reflect on the way in which the vulnerable are being penalised.
There are evasions within the Budget. It is clear that council tax will increase. The Government will seek to throw the blame for policy failures on local councils. After the previous round of local elections, councils are under the control of the Labour party or Liberal party, or in some instances there is mixed control that has resulted in Lib-Lab coalitions.
The electorate will not fall for the blame that the Government will throw on councils. The Government may wish to make local councils unpopular by causing them to increase council tax in the next settlement. That is the assumption in Wales, but there is hardly a Conservative councillor left in Wales. A few years ago, Cardiff city council had a Conservative majority. It now has only one Conservative councillor. Swansea has only one Conservative councillor, as has Newport. If, as is assumed, council tax had to be increased by about 11 per cent., it would be easy, with an unsophisticated electorate, to point the finger of blame at the councils. The Government will not succeed in that approach, however hard they try.
The Budget contains wrong priorities. I shall not repeat what I said yesterday about the World Service. It is a unique service. Its capital budget has been reduced by 20 per cent. It is clear that the Government have not appreciated the value of the service. Not too many years ago, I was sitting on a one-to-one basis with the President of a major African country. He told me that he listened to the World Service for his news. He relied on the service for that information. So many opinion formers, people whom we need to address and cultivate, rely on the quality of the service. The Government's cutting of capital provision is bound to have an adverse effect on quality of service at a time of much greater competition.
The Government say that there will be a 20 per cent. reduction in funding, but that that may be compensated by the private finance initiative. They say that the private sector may be able to move in to fill the gap that has been left by the withdrawal of public expenditure. That is no more than a hope. It may happen or it may not. Everything depends on the private sector's response.
That same hope is found in a number of other areas, such as the NHS and the assumption that the private sector will be prepared to make up the shortfall in the public provision of capital for the NHS. That may or may not be so, but it savours of a sleight of hand.
The inheritance tax measure is another wrong priority. It may be that the threshold should have gone up marginally, but for it to go up by almost £50,000 is excessive, particularly when something in respect of VAT on fuel would have been a proper priority. Even a reduction from 8 per cent. to 5 per cent., which is permissible, would have relieved poverty, targeting those who most need the reduction.

Sir Terence Higgins: That is the point that I was making. For pensioners and people in need, the amount of compensation in many cases, and perhaps even overall, has more than compensated for the tax.

Mr. Anderson: Of course, there is a compensation scheme for certain elements, but there are those at the margins whom, in other contexts, the right hon. Gentleman and his colleagues would seek to support, who will lose out as a result of the failure to reduce the current 8 per cent. to 5 per cent.
I shall not go over the missed opportunity on the windfall tax. But the way in which the leaders of the privatised utilities, doing largely the same jobs as they did before, imagine that their saleability, their market worth, in the private sector has been so mightily enhanced, must be an embarrassment to the Government. It is an affront to the great mass of reasonable people in Britain, and the Government are, in essence, doing nothing about it.
I end on this note. Historically, the Budget will he seen largely as a non-event. The Conservative party is really two parties. It is a highly divided party. The Government have been drifting ever since they were forced out of the exchange rate mechanism. We recall the bitter speech of the then retiring Chancellor, in which he talked of a Government in office but not in power. The Government have been in office, enjoying the fruits of office and exulting in the trappings of office, since that time, but they are not in power because of those divisions. The resulting drift is bad for the country. We saw that in the Queen's Speech in 1994. Once Post Office privatisation was taken out of the equation we, as legislators, had perhaps the easiest year in my memory in the House.
This Queen's Speech, apart from the scattering of populist elements, such as the asylum Bill, is, relatively, a non-event. I can think of no historical precedent save the staleness of 1819, when Shelley, in his poem about the state of the nation, wrote about
An old, mad, blind, despised, and dying king".
That is the only precedent for a Government who have run out of steam, who are tired, who have no vision, who are drifting and who should go.

Sir John Cope: It would be nice at this stage of the Budget debate to be able to compare and contrast the proposals of my right hon. and learned Friend the Chancellor of the Exchequer with the Opposition's proposals. Unfortunately, we cannot do that, because there is none, apart from the windfall tax which, as far as I could gather from the speech of the hon. Member for

Swansea, East (Mr. Anderson), was somehow a response to executive share options, and so on, in the privatised utilities, which seemed rather surprising.
I welcome the Budget although, like my right hon. Friend the Member for Worthing (Sir T. Higgins), I was rather surprised by the press reaction to it. I read in the paper that Tory Members of Parliament were disappointed and thought that the Chancellor of the Exchequer should have gone further. In many conversations with colleagues around the House since the Budget, I have not found that to be the case. It was a steady Budget and right for the economy, and will help the country to continue the steady expansion that we are enjoying.
I welcome the Budget particularly from the point of view of small businesses. They are, as my right hon. Friend the President of the Board of Trade said, crucial to the country's economy. They are the dynamic sector of the economy, they fill niches all over the marketplace, they are generally very flexible and they are, crucially, where jobs come from these days.
There are some specific measures in the Budget for small businesses, to which my right hon. Friend the President of the Board of Trade referred, which I welcome—for example, additional relief for business rates. The right hon. Member for Derby, South (Mrs. Beckett) seemed rather to dismiss that, but it is worth £300 million over three years and so should not be dismissed. There were also retirement relief and inheritance tax measures and another small lift in the VAT threshold.
I would like to see the VAT threshold higher. I am glad to say that when I was in the Treasury the threshold was considerably increased by a large jump. We are inhibited in the amount by which we can increase it further as a result of our agreements in the European Community, but that is desirable.
The most important thing for small businesses is not so much the specific measures, important as they are, but the overall effect of the Budget. Small businesses need an increase in demand, in consumers ready to spend money in order to increase their turnovers. The Budget will help with that to some extent by encouraging growth.
But the Budget also looks as though it will mean lower interest rates. I gather that at least three building societies have lowered their interest rates and more are likely to follow. That too is important.
Crucially for small businesses, my right hon. and learned Friend the Chancellor also outlined in his Budget speech several measures aimed at simplification and deregulation. They are part of an important series of initiatives to which my right hon. Friend the President of the Board of Trade referred. I know well from my experience in government how difficult simplification of the tax system and deregulation are in practice. But they are of fundamental importance and so worth the great effort that is required.
Every business has to deal not only with the Inland Revenue and Customs and Excise, which we are mainly discussing in the Budget debate, but with a series of different Government and local government departments and agencies. I counted a total of 23 regulatory agencies covering one small ordinary business, not at all in a specialist line.
The Inland Revenue and Customs and Excise are only two of those, although a business often, indeed usually, has to deal with more than one part of, for example, the Inland Revenue. It has to deal with PAYE for its employees, and with corporation tax and the calculation of profits, and so on, which involves another part of the Inland Revenue. In effect, the Inland Revenue is two bodies.
'Therefore, one of the most valuable sentences in the Budget speech occurs, appropriately enough, in column 1066. My right hon. and learned Friend the Chancellor said:
The Inland Revenue will shortly be publishing a report on tax simplification.
That was not news; it is under an obligation to do so next month, as we know from the last Finance Act. My right hon. and learned Friend added:
We shall propose that the Revenue tax code is to be rewritten in plain English".
When I was responsible for Customs and Excise, I am glad to say that it won some plain English awards for some of its leaflets, which was very good. We also started a drive to make VAT more taxpayer friendly—if that is not an impossible task. My right hon. and learned Friend went on to say:
We in the House will need to look at our procedures, to see how that tax rewrite can be sensibly handled."—[Official Report, 28 November 1995; Vol. 267, c. 1066.]
In that sentence I saw a reflection of the work that has been done by the tax law review committee of the Institute for Fiscal Studies, which published an interim report a few days ago. It is a most interesting report and it deserves the closest study. It reinforces strongly the complex web that constitutes our tax legislation now; I admit at once to having contributed to that as a Treasury Minister, with some of the longest Finance Bills that there have been. But I also know how difficult it is for the professions—let alone the small business man trying to understand what is required of him—to deal with the tax legislation. The report makes it clear how difficult the problem is, both in what it says and in the solutions that it proposes, but nevertheless that only increases its importance in my view.
The passage on parliamentary handling of such changes is of interest to us, but particularly to me because I am now on the Procedure Committee. The simplification that is required is partly of language, but it cannot he done without at least some changes to the substance of the legislation itself, and so our consolidation Bill procedures cannot be used as they are now in the Standing Orders of the House. In any case, of course, they were not designed for that purpose and would not really be appropriate. The volume of tax legislation is now so huge that to rewrite it would require a mammoth Finance Bill or, more realistically, a set of them. We need to think carefully about the parliamentary angle and desirable changes in the tax law before we get much further. The IFS report discusses it all and is most valuable, but it is important to keep up the momentum, so I welcome very much column 1066 of the Budget speech.
I wish to discuss another matter that is related in a sense. One way in which my right hon. and learned Friend might have gone—and was urged to go by many people—was down the road of reintroducing investment allowances. There was a lot of prompting for him to do that, from many sources—indeed, I passed on some of it to Treasury Ministers myself—but I believe that it would

be a retrograde step and would not help investment. Investment allowances are a political flag to wave, a way to say that something is being done about investment without having a significant effect on investment itself, and with the great drawback of adding further complications to the tax system, which is something that I wish to avoid.
My generation of accountants was brought up on very elaborate capital allowances, which altered almost every year as Chancellors of the Exchequer—of all parties—tried to encourage investment in particular assets. Over the years, we had initial allowances, investment allowances, free depreciation, investment grants and so on, all coming in and out of operation in different years. They varied between different assets: industrial buildings, plant and machinery, motor cars, ships with refrigeration equipment, ships without, all that sort of thing. Drawing offices counted as industrial buildings provided that they were attached to a factory, but not if they were not. Retail premises or showrooms were not allowable as an industrial building unless they were under 10 per cent. of the square footage. The rules always varied, not only from year to year but from place to place, as Chancellors tried to help the areas of high unemployment.
All that caused a great deal of activity for junior accountancy clerks like me, but I do not believe that it made a significant difference to the total investment, although it succeeded in moving the investment around the country in some cases. I believe that it also had some unintended side effects, for example, on the sale of agricultural tractors, which, for some years, was enormous and not really justified. The fact is that businesses invest when they can afford to do so, and in projects that they think worth while. I believe that they are the best judges of whether it is better to invest in a new machine, showroom, both, or something else. Interest rates and the examination of what they will be during the life of the asset or investment concerned have a big effect on whether they can afford it, because a lot of investment is done on borrowed money. In that respect, the Budget is helpful from the investment point of view as well as otherwise.
Expectation of demand is the biggest factor in whether the proposed investment is likely to be worth while. That, too, is helped by the Budget. Both factors mean that it is a good Budget for investment, and it is far better than it would have been if we had gone back to the complicated system of investment allowances, which would have been a big step backwards in the simplification of the tax system that I want to see.
Overall, I think that it is a good Budget, which I very much welcome.

Mr. Nick Harvey: If I said that the Budget was a missed opportunity, I would mean something very different from the many Conservative Members who might share those sentiments, judging by the picture of their faces as the Chancellor sat down at the end of his speech. I noted with interest that two Conservative Members declared surprise at the reactions in the newspapers the next morning, but if they had had the advantage of viewing the body language, faces and expressions of hon. Members on the Government Benches as the Chancellor sat down, and had been able to contrast those with the expressions on the faces of hon. Members on the Opposition Benches, they


would have understood only too clearly why the editors the following morning also saw it as a missed opportunity for the Conservative party.
But my meaning is rather different. The right hon. Member for Derby, South (Mrs. Beckett), who spoke for the Opposition, rightly and with great precision outlined the vast sums that have been blown by the Government in recent years. In particular, she catalogued the proceeds of the privatisations and added them to the North sea oil revenues, quoting both at current day prices and pointing out that they had not been used in a prudent way or to invest in the longer term. I find it remarkable that the Conservative party, which has often lectured us about the merits of good housekeeping, has found it fit to squander that money, not on capital expenditure, not on investment for the future, but on an orgy of current expenditure, most notably in the consumer boom of the late 1980s and also to fund tax cuts, which time and again have been reversed afterwards by one means or another.
When one looks at the overall state of the nation's finances, as quoted in the back-up figures to the Budget, one can see that public sector borrowing is vastly higher for the current year and for the next than the level that was quoted just a year ago in the Budget. The Government are borrowing more heavily, not to invest in the future, in capital expenditure, but to pay for the tax cut that they have used as a gimmick, which they had hoped would be of some political benefit and a salvation to them.
Another disappointment of the Budget is that some of the areas of expenditure that have been cut—which, perhaps, have not yet been highlighted to the extent that they deserve, but which will emerge over the coming weeks and months—will in some cases prove very damaging. I should like for a few moments to highlight new house building. It can be seen from the Budget that new house building will be cut in the coming year. The Government originally promised that there would be £1.5 billion for new homes next year. That has now been cut to less than £1.1 billion. So the number of new homes that will be started will drop by more than half—from 76,000 to 41,000. When one looks at what the Government's own figures suggest will be the need for new housing during the coming year, one can see that the total number of lettings that housing associations will be able to undertake—both the new build and the other forms of housing that they are able to make available—will be around only half of what the Government acknowledge could be needed in the coming year.
Of course, as well as the impact on housing provision, it is well known to all hon. Members that the number of people out of work in the construction industry remains alarmingly high. It is down somewhat from the high of 500,000, but is still unacceptably high. All those people have to be paid benefits and are not contributing anything back in the way of tax revenue to the Government. That is costing the nation a great deal at a time when there is a need for new housing.
In my region, the south-west, the number of houses that housing associations can start next year will fall from nearly 7,000, as the Government first promised, to

about half that figure—3,500. Not only will unemployed construction workers in mine and the neighbouring constituencies not be given the opportunity to get back to work and do something useful, but many of my constituents who are in need of housing will not have that need met. That is not unique to my area or to north Devon. A survey of Members of Parliament showed that housing was singled out as the biggest issue in Members' postbags. Two thirds of Conservative Members and all Labour Members agreed that there was a shortage of available rented accommodation in their constituencies.
A heaven-sent opportunity to deal with that serious problem is being wasted so that money is available for a tax cut in the Budget. That is very nice for those who are in a position to enjoy it, but it is not of much benefit to those on low incomes who do not even pay tax and are without homes. The Budget could have done something concrete to promote house building and tackle that problem.
Much has been said about the private finance initiative. House building is one of the areas in which it has been deemed to be a success. It has been possible for housing associations to attract private funding to match pound for pound the public moneys that they have been putting into new house building. In addition to the £450 million of public funding that will be lost, a further £450 million of private funding, which could have been attracted through the PFI, will also be lost. That is nothing short of a scandal and it is one of the several stories that will emerge after time and after people have had the opportunity to look at the finer print of the Budget and see some of the real damage that is going to be done in many parts of the economy to pay for the 1p tax cut.
This afternoon, there have been discussions about measures to help businesses and small businesses. There have been some in the Budget and it would be churlish not to acknowledge them. None the less it remains a fact that all those referred to are too modest. It is welcome that employers' national insurance is down from 10.2 per cent. to 10 per cent., but this hardly seems to be the occasion to raise the flags and celebrate. It needs to go a good deal further than that.
Further relief against the increases in business rates for small businesses is welcome, but even after that many small businesses in the south-west and elsewhere will find the rate that they are expected to pay cripplingly high and a major problem as they try to steer their way out of the recession. There can be few regions of the country that have suffered quite as badly on the business rate as the south-west.
The fact that small firms will also face a lower corporation tax bill in the coming year is also welcome. While the small increase in the value added tax threshold is welcome, however, many small businesses are desperate for fundamental reform of the VAT system. I do not pretend for one moment that a magic wand can be waved to put that right automatically, but some acknowledgement by the Government that much further reform of the system is necessary would be welcome.
The right hon. Member for Worthing (Sir T. Higgins) chose to refer to the moneys which, during his speech on Tuesday, the Chancellor led everyone to believe


would be available for education in the coming year. Education should be a top priority for investment because it is unquestionably investment in the future. If we are to tackle the long-term spiral of decline, there can be no better way of setting about that task than bringing about real improvements in our education system and in the facilities in which those working and learning in the system find themselves trying to cope every day.
On hearing the Chancellor's remarks, I like many others genuinely thought that he was making £878 million of new money available to education, of which £770 million would be channelled through the local authorities. Like everyone else, on studying the finer detail of the Budget, I was surprised to find that the central Government settlement to local authorities for the coming year is to increase by a mere 3.3 per cent., which is broadly in line with inflation, and that the money that was supposedly being earmarked for education does not exist.
Local authorities are invited to spend that additional money on education, but are not given the means to do so. They have to make a choice. They either cut other services that they are responsible for providing, which means that they will have to cut road repairs, libraries and personal social services, which are already strained to the limit as they struggle with the task of implementing the community care programme; or, if they cannot find any way of cutting other services, they will have to raise the council tax to pay for the education package.
It is interesting to find in the Red Book that the Government anticipate as part of this Budget that councils will have to increase council tax by three times the rate of inflation. When councils set their budgets next April and May and find themselves driven to do so, one can confidently anticipate the cries from Conservative Members who receive letters from constituents complaining about the rise. They will say, "Look at this. Liberal Democrat and Labour councils are increasing the council tax." They will not be able to point to any Conservative councils doing it because there is none left.
People must understand that that is what the Conservatives have been anticipating from the word go. The whole thing is an elaborate deception. They have given the impression that the money is there, but it is not.

Mr. Stern: The hon. Gentleman claims, with what justification I am not sure—my hon. Friend the Minister will make that clear in her reply—that it is assumed that the council tax will rise by a rate three times higher than inflation. As a citizen of Bristol, I can tell him that if the council tax were to rise by a mere three times the rate of inflation, it would be a blessed relief to the citizens of that city.

Mr. Harvey: I am not sure whether other citizens of the city would, necessarily agree with the hon. Gentleman's blase attitude. I do not think that council tax payers will find it remotely acceptable that they are asked to pay three times the rate of inflation. When they remember that the Chancellor promised this great sum for education, it will be interesting to be able to tell them that the very Budget that included the supposed provision of that extra money had assumed

all along that the increase in council tax would have to be three times the rate of inflation and that only by means of such a rise were the Government able to quote that notional figure in the first place.
If the Government had simply said that they were giving local authorities a settlement for next year of 3.3 per cent., which is broadly in line with inflation, there would have been relatively little argument or cause to demur. Of course, there would have been some proper but predictable complaints about higher pupil numbers, the extra tasks that local authorities were being asked to undertake and the fact that they had not been taken into account in a settlement that was only in line with inflation. But, broadly speaking, everybody would have found such a settlement more or less reasonable.
Apparently, however, the Government could not confine themselves to making such a statement. They had to pretend that a vast extra sum was being made available for education, which is not the case. It was an elaborate piece of deception, but I do not believe that they will succeed in pulling the wool over the eyes of council tax payers.
The Government suffered bad bruising last year in the battle over local authority finance, which resulted in many Conservative councillors losing their seats in last May's local elections. Some of those councillors had given many years' good service to their communities and did not deserve to lose their seats, but they were driven into that situation by the cavalier and tack-handed manner in which central Government administer local authority finance.
Exactly the same will happen next May. I predict with confidence that there will be massive casualties on the Conservative side in the local authority elections. And Conservative councillors will know exactly whom to blame—the Chancellor of the Exchequer and the Secretary of State for the Environment. They are the people who pulled that ridiculous scam that will fool nobody, and which will not only have a devastating effect on our education services but will result in catastrophe for the Conservatives next May.
One thing above all else distinguishes our party's position from that of the Government: we have said all along that we believe that the equivalent of 1p in the pound in income tax should be spent on education. That is real money—£2 billion, three times the sum the Government pretend they are making available.

Mr. Spring: Does the Liberal Democratic party propose to ring-fence the much vaunted 1p increase in income tax to ensure that the money is spent on education, or will it simply be paid through the block grant to local government?

Mr. Harvey: It is certainly our intention that that money will be an extra grant on top of the block grant that is paid in the normal way, and that it should be available specifically for spending on education.
Polling evidence has found that that was the single most popular policy of any party at the general election. That is why we shall say again to the public next week that we have been consistent, and that we still believe that the equivalent of 1p in the pound on income tax should be spent on education. We do not believe it right or proper at this time for the Government to borrow yet more heavily in order to give out a 1p tax cut.
In the Lobby next week we shall have no hesitation in voting against that wholly irresponsible, uncalled for, unwarranted cut in income tax when there is such a demand and such a need for investment in our future, and for making our children's education a top priority. That would avoid the terrible scenes that we saw last winter as well as the situation this year, when most local authorities have had to start the autumn term with higher pupil numbers but, in many cases, with hundreds fewer teachers.

Mr. Michael Stern: I start, as so many of my hon. Friends have done, by congratulating my right hon. and learned Friend the Chancellor and his Treasury colleagues on the prudence of the Budget.
The day before the Budget, there was great concern, largely whipped up by the media, that there would be a huge giveaway. Indeed, it was the Conservative supporters to whom I spoke who said that they hoped that the Budget would be not the sort of Budget that they were reading about in the media, but the sort of prudent Budget that they would expect from my right hon. and learned Friend—and that was what they got. Certainly a Budget that matches the necessary tax cuts with equivalent reductions in public spending cannot be described as other than prudent.
My concerns about the Budget go a little further than those of many of my hon. Friends in that, although I accept that it was the right shape, I wonder whether it was prudent enough. When a nation is borrowing more than £1 billion every fortnight to finance public spending, there is a strong argument for saying that further cuts in public spending should have been found, and that the Chancellor should at least have presented more strongly the case that the cuts that had been found should have gone directly into reducing the public sector borrowing requirement.
It is not so long since the years between 1987 and 1991—four years in which the public sector outturn was £3.5 billion, £14.7 billion, £8 billion and £0.6 billion. Having given those figures, I am afraid that I must admit to cheating a little in one respect—they were not public sector borrowing requirements but repayments of public debt.
In those four years, a Conservative Government succeeded in doing what few if any other Governments have succeeded in doing in the past 100 years—they managed public sector finances so as to repay national debt. That not only reduced the burden on future generations in terms of repayment requirements, but reduced annually the burden of interest on future annual current accounts.
I am therefore a little worried that the Chancellor's announced plans for management of the public sector balances over the next few years tend only towards a balance in the medium term. That worries me not only because I am an accountant, and practised full time as one for many years before I entered the House, but because I know that, for any business to attempt to break even, it must aim firmly at making a profit.
If the Chancellor is attempting to reach break-even on the public sector finances by 2000, I should like more strenuous attempts to be made, by reducing public expenditure further, to achieve public sector debt repayment, which the Government achieved in the late 1980s and early 1990s.
The right public sector borrowing requirement at any particular time is a matter over which economists can argue—and frequently do. It cannot be arrived at simply by comparing one country with another. It is not, perhaps, surprising that our achievement last year in terms of public sector net borrowing as a percentage of GDP was considerably worse than Germany's—I suppose that that is what one would have expected—but it was considerably better than that of Italy. That, too, is probably what one would have expected, but I was a little surprised to find that our performance was quite a bit worse than that of France.
Compared with our non-European Union competitors, the situation is a little more worrying. As a percentage of GDP, the general balance of United Kingdom finances was considerably worse than those of both the United States and Japan. Even that is only a guide, because to work out how much a country should borrow in any year, one must take into account the financial position of that country at that particular time and, as I said during the speech by my right hon. Friend the Member for Worthing (Sir T. Higgins), the asset base against which the borrowing has been made.
In the 1980s, it was frequently said—with considerable justification—that Britain's borrowing capacity, and the reason why Britain's currency was so strong during the height of our borrowing in the 1980s as well as when we were repaying the national debt, was the strength of British assets abroad, against which, effectively, the world's financial markets were judging our borrowing. I wonder whether the same would be true today. While our borrowing is coming down—and will continue to come down in the next few years—it is considerably higher than it was in the 1980s. As the mobility of international privately owned assets has become greater and as more and more of the world's economies have become market economies rather than controlled economies, the skip to and fro of assets has become easier.
I suspect that a banker running his eye over the balance sheet of United Kingdom plc would come to two conclusions. First, there is a great danger of the United Kingdom—to use an accounting phrase—over-trading at current levels in relation to its asset base. Secondly, that asset base might in any case have been significantly eroded in Government terms since the 1980s, when it was last measured.
The effect is considerable worry in two respects. First, the current plan is for the PSBR only to reach a balance. In other words, on the declared plans of my right hon. and learned Friend, not 1p of what we are now borrowing is intended to be repaid in the medium term. It is all there as a burden for future generations. Secondly, we have not abolished the world's economic cycles. We all know that what turned our public sector debt repayment of the late 1980s and early 1990s into the PSBR was the world recession, which forced us to increase public spending on cyclical items such as unemployment benefit and income support. The recession resulted in our previously sound public finances falling into the worrying position in which we now find them.
If one talks to those in the business community—they are currently enjoying reasonable growth and have been doing so for the past couple of years—there is little doubt that the next world recession will come. What frightens me is the growing consensus among economists and business men that, as the world's trading nations have increased, the vulnerability of the world economy has also increased. The economic cycles are also speeding up.
Most of the economists and business men who are being asked to put a date on the visible start of the next world recession are plumping for a date around the turn of the century. That, of course, is the period during which—under the Chancellor's present plans—it is intended that British public sector finances will get closer to balance.
My fear is that, as we approach a worse position in the public sector than we had in the 1980s, we shall enter another recession. That recession will cause us to start increasing public sector borrowing again without having had any opportunity to repay what we have borrowed. Inevitably that will have an impact not only on the vulnerability of the British economy to future world cycles, but on the debt burden and interest burden that we are leaving to subsequent generations. In the long run, it will have an impact on the expected life styles and standards of living of the generations for whom we are now providing in our management of the public sector.
The conclusion that I have reached reluctantly—which I have been considering for some time—is that, in our broad pattern of public sector spending, we have in many areas developed champagne tastes on what remains a beer income. In the next few years, we need to start putting before the public the possibility that a number of what appear to be permanent public spending programmes might need to be looked at again.
A banker looking at the British balance sheet—but not taking into account other factors such as social acceptability—would probably advise a reduction in expenditure of about £30 billion on permanent programmes over the lifetime of this business cycle. That is a far larger reduction than has been contemplated either in this Budget or in alternative budgets such as those put forward by the Conservative 2000 Foundation.
Such a measure would involve reducing many programmes which people regard as foundations of the welfare state. It would involve, for example, looking seriously at whether we can continue to pay child benefit above income support levels. It would involve looking seriously—as I believe the Government should—at the range of exemptions from prescription charges and at the level of those charges. It could be possible both to lower the level and to increase the exemptions while saving a considerable sum in public spending. It might even involve—to howls of protest—looking at whether a non-funded basic state retirement pension should be paid to those on upper incomes.
Such a measure would involve looking at the scope of the NHS to see whether it is capable of taking on the demands that are currently made of it, and the demands that will inevitably be made of it in the future in the light of shifting scientific research, the availability of medical treatments and the demands that people inevitably make once they know that such treatments are available. This and many more areas are not currently being looked at.
There is an absence of any realistic alternative from any other party in the House because—let us face it—there is no point in discussing public expenditure reductions with the Opposition because they do not even understand the meaning of the term. I believe that the British nation will, in the next few years, look to the House and the Government to consider matters of this nature. It is not sufficient simply to solve the financial problems of today by pushing them on to future generations.
Clearly it will be necessary to look at this Budget in the context of my right hon. and learned Friend's next Budget which he will deliver, in my view, in November 1996. I believe that it will be necessary to consider what scope there is in the long term for public expenditure reductions, because only if we can begin to educate the British public about the need for public expenditure reductions of the order that I have outlined will we be able to set up for the future a sound public sector financial system that does not leave unacceptable burdens for future generations.

Mr. Paddy Tipping: I am very pleased to follow the hon. Member for Bristol, North-West (Mr. Stern), and I was struck by his simile "champagne tastes on a beer budget". I hope that he will forgive me if I say to the House that I think a more correct simile from him would have been "caviar on a fish and chip income". The hon. Gentleman will recall the occasion to which I am referring.
My hon. Friend the Member for Swansea, East (Mr. Anderson) touched earlier upon one aspect of the Budget that has not been given much attention—the environmental sensitivity, or greenness, of the Budget. I am struck by the Budget proposal to take the income from the landfill tax while reducing national insurance. It is a switch from a tax on labour to a tax on pollution, which is a significant move. I look forward to future Budgets, perhaps introduced by a different Government, that will treat that move as a touchstone because we could do more of this.
The Budget maintains the difference between leaded and unleaded petrol, which is an input tax. I am more interested in output taxes. I am confident that, with increasing technology, we shall soon be able to measure the pollution from vehicles. I want the pollution from vehicles to be taxed as an alternative.
VAT on fuel has been discussed tonight. Hon. Members will remember that, in the discussions and arguments on that subject in the House over recent months, one justification for VAT on fuel was that it drove down consumption and thus helped save the planet. But it does not because VAT on fuel takes no recognisance of the fact that electricity comes from different sources. We should consider that fact as another future Budget measure. I find it amazing that at Drax and Radcliffe power stations, for example, flue gas desulphurisation equipment has been fitted. The cost at Drax was £700 million. The consequence of generating electricity at those retro-fitted plants is that the cost of electricity is slightly higher. Moreover, the added costs at those stations reduce the stations' competitiveness in the pool to such an extent that, at certain times of the year, dirtier polluting stations come on line before them. That


is clearly crazy. A Budget measure that we should strive for in the future is to give a green premium—a credit—for green electricity.
These are challenging and difficult arguments and I look forward to working on them and making environmental taxation a way of enhancing the environment and, as my children would say, saving the planet.
The Budget contained other environmental issues. We have been constantly challenged to say where the Opposition would make savings. Let me give one example. I note that the countryside stewardship scheme, which is designed to protect wildlife and enhance the countryside, is to be transferred to the Ministry of Agriculture, Fisheries and Food on 1 April next year. That budget will increase next year by £5 million.
I am a strong supporter of countryside stewardship as it lifts the landscape and protects the countryside, but I ant unhappy about one aspect of it: the payment to landowners for allowing public access, which is part of the scheme. I have done some research on this and I acknowledge the work that the Ramblers Association has done. It found that 44 per cent. of the sites that receive public access money already have access or a footpath running through them, so we are paying landowners for something that we already have. Those access payments amount to £6 million over 10 years. The issue should be looked at because we are not receiving value for money from the access element of countryside stewardship.
An example of where more money could be saved is the common agricultural policy. I was disturbed to see that the Budget increases our contribution to the CAP next year by £60 million. Families pay around an additional £20 a week because of CAP contributions, so we should look carefully at that budget head. We should look particularly carefully at the arable areas scheme, which pays grants to farmers for producing certain products, principally cereals. In the last year for which figures are available—1994—English farmers received £1.2 billion. As part of that, they received £189 million for set-aside—effectively doing nothing. Nobody likes set-aside. On pursuing the matter, I found that in 1994 more than 2,000 farmers received payments of more than £75,000 under the arable areas scheme. It is disturbing that such large sums of public money have been paid. We should scrutinise and perhaps cap the amount that individual farmers can receive from the scheme.
I was even more disturbed to find that, in 1994, a small group of farmers received more than £1 million each under the arable areas scheme. I am disturbed that the Government, for reasons of confidentiality, will not say how many farmers received more than £1 million. Nor will they give the top payment made in 1994 under the arable areas scheme. That is big public money, to which poor families in my constituency contribute in terms of higher food costs. They have a right to know who receives that money and how much is received. I invite members of the Treasury Bench to look at the matter.
We should have some return for such payments. We have a right to tell landowners that we want a return for the money that they receive for set aside. We want them to lift the landscape and enhance the environment by creating wildlife habitats, working on hedgerows, planting

more trees, creating ponds or putting back the walls that are in disrepair all over the country. If farmers are to receive that kind of money, we have a right to expect a return—a green premium.
I shall now deal with some more familiar themes of the Budget, which other hon. Members have discussed, such as the need to create prosperity and jobs, and reduce unemployment. That is what people in north Nottinghamshire want. They pay for it and they know that they have experienced tax increases. They have had broken promises: there have been 21 tax increases, and a typical family now pays £800 more. Income tax may have gone down by 1p in the pound, but the average family is still £670 worse off under this Budget. People expect and deserve some return.
The Nottinghamshire coalfield has had a tough time and Nottingham miners feel that the Government have betrayed them. I remind the House that, in 1979, 40,000 miners worked in the coal industry in Nottinghamshire whereas today, only some 3,000 work in it. Unemployment is therefore a real problem. In October 1992, the then President of the Board of Trade announced that he would close most of this country's coal industry and unemployment went up in coalfield areas. In small pockets, against the national trend, unemployment is still increasing. In general terms, unemployment is going down.
Since October 1992, unemployment nationally has gone down by 17 per cent. In the Mansfield travel-to-work area, which covers a great deal of the Nottinghamshire coalfield, unemployment has gone down by only 7.1 per cent. That highlights the increasing gap between the affluent and the poor. Certainly that is how it is perceived in the Nottinghamshire coalfield.
I think that people in Nottinghamshire would look askance—in fact, I know it—at the Budget proposal to raise the inheritance tax threshold to £200,000. They know that they could buy a pit house in a place such as Bilsthorpe or Boughton in north Nottinghamshire for £11,000. For those people, £200,000 is beyond the moon. It rings hollow. They are also astonished that the budget for social housing has been cut—and cut severely. The Red Book makes it clear that £500 million has been taken away from housing associations and local authorities this year on top of cuts in the previous two years. For people who live in former National Coal Board houses that now belong to housing associations, there is no prospect of getting a renovation grant through moneys from the Housing Corporation because that was blocked at the time of sale. People live in intolerable circumstances. There is no prospect now of those houses being improved.
To talk about people being allowed to leave £200,000 rings hollow when we consider people who live in a pit house in Bilsthorpe. It rings hollow because the Nottinghamshire coalfield, and coalfield communities across the country, are crying out for investment in education, training, infrastructure and, most of all, in the future.
The Budget cuts investment and capital spending. The people of Nottinghamshire want to see the road to recovery—the road that we want to see is a link between the M1 and the A1 across north Nottinghamshire and, as part GC it, the Rainworth bypass.
I am pleased that the Secretary of State for Transport is on the Front Bench. I have noted the cuts that have been made in the trunk road programme. It will not be


long before local transport capital expenditure is announced—before Christmas, I believe. We want that road for recovery. We want the Rainworth bypass; it will open up development land in the area and it has the potential to bring new jobs into the area. Nottinghamshire county council has bid for £10 million over the next two years for that. I hope that that bid will be considered not only in terms of traffic and highways but as a bid for a road that can regenerate part of the Nottinghamshire coalfield.
I hope that the Secretary of State for Transport will come again to the Robin Hood line—he was there recently. The county council is in active discussions about the funding shortfall of phase 2 of the line. There is a gap of £4 million. I hope that some compromise can be reached. About £1 million of that £4 million gap results directly from rail privatisation and the increased charges that Railtrack has made.
We want to go forward and extend the line right through the coalfield to Worksop and Retford. Phase 3 is covered in the council's bid and I hope that it will be considered. I hope that the railway transport element of the Department of Transport's budget will be protected, as it has been so far, and that local authorities will get their fair share, especially in the case of the Robin Hood line.
I also want fair shares for English Partnerships, a body set up to help bring regeneration to the coalfields. I note with some alarm that its budget is being cut. We need to clear up derelict sites. There are pit tips and derelict land all over north Nottinghamshire. We need derelict land grant to bring that land back to life. We need to attract factory units, create new businesses and provide homes for new businesses. I am extremely worried that with the cuts in grant aid to English Partnerships all that will be put at risk.
I also note that the training and enterprise councils are to have their budgets cut by 5 per cent., on top of the drop in coalfield money that came to TECs covering the coalfields. Most of all, people in coalfield communities need skilling and reskilling. They need to be competitive in a changing world and investment in training could be a lifeline for them.
I note, too, that the money available to colleges of further education is to be cut. Such colleges are expected to take more students but at a lower cost. I am disturbed about what is happening at some colleges of further education, not only in Nottinghamshire but across the country. The standards of teaching, of courses and of qualifications are dropping. I suggest that some of these CFEs will drop soon. Some are technically bankrupt. It will not be long before the first CFE goes into receivership. That path will be progressed and enhanced by the Budget cuts in their funding.
The windfall tax has received a good deal of criticism. I was surprised on Monday, the day before the Budget when Severn Trent Water, our local private water company, announced increased profits of 75 per cent. or £160 million. I note, too, that all it did for its customers was offer them a £4 cash-back per year. That does not seem to be a great benefit from privatisation. I would have no hesitation in examining the profits and dividends of companies such as Severn Trent and East Midlands Electricity, looking at what they have put back into their capital plans and making a judgment about a windfall tax.

Young people are our future. I believe strongly that we ought to offer young people quality routes to training. Money from a windfall tax should be applied in that way.
I note, too, that the civil service is going to be cut by 12 per cent. I was staggered this week to find that European money that could come to Nottinghamshire coalfield communities is being held up because there are not enough civil servants in the Government office for the east midlands to process the application. We paid that money into Europe and we want it back. The stumbling block appears to be a lack of civil servants locally, in the office in Nottingham, to deal with those claims. It is even more astonishing that the local office should have written to local authorities asking for staff to be lent to the Government office to process the claims. Frankly, it is an insult to people in Nottinghamshire.
It is disturbing that no effort has been made in the Budget to get the construction industry going. I remember the private finance initiative being described as additional to Government capital spending. All that now seems to have gone out of the window. I suspect that it will not be long before national lottery money is used in the same way, as a substitute for Government money.
Local authorities have also faced cuts. I have looked carefully at the settlement announced today. Is it not the case that next year local authorities will receive £6.3 billion for capital projects? That is a cut of £700 million—or 0 per cent.—on this year's sum of £7 billion.
I should draw attention to the problem of crumbling schools in Nottinghamshire. Some of the money that has been cut could be used to renovate and refurbish them. There are £85 million-worth of repairs outstanding in Nottinghamshire's schools. In the Chancellor's own constituency of Rushcliffe, there is £6.7 million-worth of work outstanding. I draw attention to Rushcliffe comprehensive school, which has £1.5 million of outstanding repairs, and to Brookside primary school in East Leake, where £105,000-worth of repairs are outstanding.
I know that the governors of those schools, as well as the teachers and parents, would be delighted to see the Chancellor there. They would argue with him about the consequences of the capital cuts to local authorities. I believe that the cuts are shortsighted. We should be investing in capital projects to create jobs and to put down seedcorn for the future.
I deal briefly with the local government finance settlement that was announced today. I am delighted that the Chancellor gave an exclusive interview yesterday to our local paper, the Nottingham Evening Post. He told it that there was a "Cash bonanza for Notts". I think that the Chancellor may play it differently at home from down here in London. Back in Nottinghamshire he has been giving the impression that there is loads of money, boys. The reality, however, is quite different.
If one looks at the financial settlement and focuses especially on education, it is apparent that, this year, local education authorities are spending £797 million more than their standard spending assessment, which is the Government's yardstick. Next year, the pledge of extra money—4.5 per cent. growth in education spending—will bring in £770 million. That promised and lauded extra money does not fill this year's gap.
The people of Nottinghamshire know those figures only too well. They know that the current year's settlement was tight, as the Secretary of State said. In Nottinghamshire's schools, there are 350 fewer teachers now than there were before the summer holidays. That leads to larger class sizes. In north Nottinghamshire, three out of four primary schools have classes of more than 30 pupils, and I believe that there is worse to come. Despite the settlement and the promised cash bonanza from the Chancellor, I do not think that the gap is going to be cut.
In the current year, Nottinghamshire county council is spending £25.5 million, or 7.5 per cent., more on education than the Government yardstick. At best, the settlement announced today brings an extra £15 million into Nottinghamshire schools. That still leaves a budget gap of £10 million.
I anticipate that there will be further cuts in the number of teachers this year, possibly in the region of 300. I find it very hard to understand that, while the number of teachers is being cut and class sizes are getting larger, we, the council tax payers of Nottinghamshire, are being asked to pay more. I think that 300 teachers' posts may go and class sizes will get larger. For that privilege, I anticipate that the increase in our council tax next year will be about double the rate of inflation. We shall pay more and get less in Nottinghamshire.
I do not think that the Chancellor can hurt the people of Nottinghamshire any more. He should listen to the people he meets and respond to those who have written to him. I expect that he has had 25,000 letters about local authority cuts from his constituents. They want better and I want better.
In the future, I want a Budget that is green and clean. I want a Budget that enhances the environment and lifts the landscape. I want a Budget that puts investment for prosperity at its core—investment in education, training and infrastructure and—most important—a Budget that invests in the future of Nottinghamshire children.

Mr. James Cran: I thoroughly enjoyed the speech made by my right hon. Friend the President of the Board of Trade. Unlike the relatively few contributions of Opposition Members, it was factual. The speech made by the right hon. Member for Derby, South (Mrs. Beckett), who led for the Opposition, did not contain one fact. Of course, she attacked us—I do not complain about that—but it would have been novel to hear just a little about what the Opposition propose to do to make up for what they consider that we have not done.
The right hon. Member for Derby, South also had a rattling good cheek in suggesting that the Government had arranged for so many statements to be made today to reduce the time for debate on the Budget. The irony was that, at that moment, there were hardly any faces to be seen on the Opposition Benches. Had the Government done as she suggested—of course, I do not believe for a minute that they did—then one would have to say, "Thank goodness" because we would have had precious few contributions from Opposition Members.
I was interested to hear what the Liberal Democrat spokesman had to say. He said that, on Budget day, he and his colleagues noticed how glum we—the Conservative

Members—were looking. That is odd, because we were looking at them and thinking how glum they were. I think that they realised that there might be a great deal more in the Budget than they were able to take in on the day.

Mr. Spring: Does my hon. Friend recall that the Liberal Democrats looked most glum after the speech made by the right hon. Member for Yeovil (Mr. Ashdown)?

Mr. Cran: My hon. Friend makes a telling intervention.
I support the Budget. As I look back at various Budgets, but without mentioning one in particular, I would have to admit that I found it less easy to say that I supported some of them, but I certainly support this one. Like many of my colleagues, I have been astonished by the publicity surrounding the Budget, which implies that Conservative Members are opposed to it. That is not the case. If I achieve nothing else, I should like to say that I and many of my colleagues support the Budget. Opposition Members may be worried that it is a two-stage exercise. The Chancellor would not say that—he would say that it is merely the latest Budget, and I understand that. However, I expect it to be a two-stage exercise and I am afraid that Opposition Members will have to wait for another Budget in November 1996. The smiles on the faces of Opposition Members may be fewer then than they appear to be now.
My first reason for being enthusiastic about the Budget is that it is fiscally sound. It introduces tax cuts, but there are also cuts in expenditure. I might have wanted rather more in the way of tax cuts than were introduced and I might have wanted a few more cuts in public expenditure, but that is a matter of judgment. Whatever else might be said, there is no doubt that the Budget has impressed the marketplace. That fact was not taken into account by any of the contributions that I have heard from Opposition Members.
I like the fact that there are no gimmicks in the Budget. What is a gimmick? We can all look up the word in the dictionary, but one gimmick that we kept on hearing about from Opposition spokesmen was kick-starting the housing market. I am delighted that the Chancellor did no such thing. There are low interest rates and price discounting in the housing market, which is enough to get the market moving eventually. I invite all Opposition Members to come up to Beverley, where the housing market is beginning to move. I have the impression that that is happening in other parts of the country—therefore, there is no need for gimmicks.
I am also delighted that the Government have resumed the tax-cutting propensity—that is what Conservative Governments are rightly concerned about in the medium and long term. I am delighted at that resumption because I have always believed, and I expect I always will, that the state—even under prudent Conservative Governments—has spent too much of other people's money. That was brought home to me by the social security budget which, I well remember, stood at £37 billion when I was first elected to Parliament in 1987 and next year will be about £94 billion or £95 billion. Conservative Governments have done much to add to that total, which is why I am supportive of the present Government's efforts to examine critically what the state spends and what the individual spends. I would like that debate to be encouraged among not only


Conservative Members, but Opposition Members. I do not think, however, that it is taking place among Opposition Members.
I like the Budget for another reason which was never mentioned by Opposition spokesmen—it encourages business, industry and the City. Undoubtedly, the reaction to the Budget from business generally has been better than the right hon. Member for Derby, South was prepared to admit. She merely took the tepid view of the Confederation of British Industry—an organisation that I admire less and less, even though I was once employed by it. One has to look less at what the CBI says and more at what individual business men say, which gives a different picture. Business men have given the Budget a much more enthusiastic response and if I have time I shall tell the House what one or two business men have said.
Finally, I am enthusiastic about the Budget because it encourages savers. I am not only a Scotsman but an Aberdonian and we are famous for our capacity to save money, which I do. I am delighted that the Government are now giving the community another impetus to save because the savings ratio of late has not been nearly good enough, although it is improving. Many within the community will wake up to the fact that there have been reductions in tax for those of us who save money in building societies, banks or wherever. Moreover, I note that even my hon. Friends are forecasting cuts in the interest rate. Of course, the business community wants interest rate cuts, but we must remember that what benefits industry does not benefit the saver. I shall, however, leave the Treasury team to deal with that conundrum.
Direct taxation is thankfully resuming its downward trend. The Labour party—not particularly tonight, but on radio, television and in the newspapers—states that it is now the low-tax party. My constituents in Beverley should treat that statement with extreme caution. My neighbour, the deputy leader of the Labour party, the right hon. Member for Kingston upon Hull, East (Mr. Prescott), said that such promises as the Labour party would make—we do not have the details—would be for one year only. The electors of Beverley and elsewhere had better remember that.
In addition, Opposition Members in private also tell me, "Well, you will see what happens when the boot is on the other foot." We all know what that means: the Opposition will enjoy the ability to take more money out of people's pockets. I warn the taxpayers of this country to look out. The Labour party would introduce more bands for direct tax because that would take out more money from other people's pockets. The upper rate band would undoubtedly be increased to between 50 and 60 per cent., if not more.
The other issue that I never hear mentioned by Opposition Members, except in private, is that of unearned income. I do not have any unearned income; I have had to earn all my capital—a distinction not made by the Opposition. Under a Labour Government, unearned income will undoubtedly be plundered because they will need the cash.
I am pleased about what the Government have done in relation to inheritance tax. I was delighted last June to hear my right hon. Friend the Prime Minister make a commitment to the Conservative party that inheritance tax should be progressively abolished. It is a monstrous tax.

I caution Opposition Members to look at how many people in the community have to pay inheritance tax. In some cases, tax has been paid throughout the lifetime of the capital and the Treasury and the Government take the final cut on one's deathbed. That is simply monstrous and I am delighted to hear what my Government intend to do. I welcome the increase of the exempt amount to £200,000 and I look forward to the abolition of the tax.
I have mentioned reducing tax on savings. Clearly, many people have not cottoned on to the fact that they will retain more of the interest than they receive on their accounts. I applaud that measure.
I was pleased that the Budget contained very few references to VAT which, as we know, is an unpopular tax. It is not as had when it is levied on luxuries—although I never know what a luxury is these days—but it is a different matter when it is levied on essentials. It is, however, far too easy to raise VAT. It encourages spenders in Government. We must have one or two spenders on the Conservative Benches—although not too many—but there are certainly a great many on the Opposition Benches.
I warn the community again. A tax that is too easy to raise encourages spending in Government Departments. I say to my Conservative colleagues that we must be careful and recognise the public resistance to that tax. I am resistant to VAT. I have always bought new cars until now, but I have no intention of doing so in the future, as I am not prepared to pay the valued added tax on a new car. I may even reach the stage of buying second-hand suits, if I have to, to avoid that tax. However, I am idiosyncratic on that subject and I expect that the House will bear with me.
On long-term care, I am delighted that my Government have recognised what were undoubtedly the beginnings of a minor scandal, which occurred as a result of the developments in community care. I am pleased that the first step has been taken. I do not regard the first step as being especially generous, but it is a move in the right direction. I look forward to quick initiatives that will come out of my Government to ensure that we do not have the position that exists in my constituency—the same can be said of others—where people find it necessary to sell houses to pay for the fees for long-term care that they receive alongside some people who did not save, although some people were simply unfortunate and could not save. I fail to understand why I, and many of my constituents, should forgo consumption to pay for that care whereas others do not.
I finish with one or two comments about what the Budget has done for industry. Having been associated with the Confederation of British Industry, I know that industry is the boiler house of wealth creation. Industry and business create wealth. They create the cake and we divide it. Therefore what we should do, which is better done by a Conservative Government, is ensure that we encourage industry, but not with hand-outs. Too often, the Opposition say that industry needs help in the form of a hand-out. Industry wants no such thing. It wants what the present and the preceding Government have done—which is to provide a deregulated background in which it can operate. Usually, business men ask Governments to keep out of their hair. I believe that Conservative Governments have done that, in the case of inflation, and I congratulate my right hon. and learned Friend the Chancellor on the fact that he continues to bear down on that evil.
I well remember all the industrialists I used to speak to in the period 1975–79, who repeatedly mentioned the fact that the inflation rate was increasing. It reached about 26 per cent.

Mr. Spring: Twenty-seven per cent.

Mr. Cran: I am corrected, and I am happy to be so. What did that do for the competitiveness of British industry and individual companies? It completely destroyed the former, and it destroyed the prospects of many good companies. Therefore, the Chancellor is absolutely correct to bear down on inflation.
The Chancellor was equally correct not to impose a windfall tax. In that regard, I do not understand why the Opposition do not understand why a windfall tax would not be beneficial to the British economy. It would be beneficial to the extent that a Labour Government would use the proceeds in some way for one year, but what signal does that send out to inward investing companies? I venture to suggest that they would be less interested in coming to the United Kingdom than has heretofore been the case, when I believe—I am open to being corrected—that more than half the inward investment of the European Union has come to the United Kingdom. I am also delighted to notice what my Government have done on uniform business rates.
I have referred to the tepid—it is tepid—judgment of the CBI. I can therefore throw that away. However, I read in the Financial Times that the chief executive of Asda Group, Mr. Archie Norman, said:
We are delighted. It is a bullseye.
That was not mentioned by the right hon. Member for Derby, South, was it? Sir David Simpson, chairman of British Petroleum, said:
It is good to see that the Government intends to continue reducing its spend as a proportion of GDP and that it has reaffirmed its aim to balance the Budget"—
and so on. He is obviously delighted.
Sir John Banham, a former director-general of the CBI, and chairman of Tarmac, says:
The Chancellor is on the right track and the measures he has put in place provide the best prospects for the UK building industry.
The right hon. Lady should have balanced her remarks by telling us about that.
What does the City say?
He's taken the prudent path
says the head of bond research from Yamaichi international bank. I could go on, but I know that other hon. Members wish to speak. [HON. MEMBERS: "Hear, hear."] I shall therefore bring my remarks to a close—reluctantly, because I should like to say an awful lot more on that subject. However, I hope that my colleagues will allow me to ask one question. After 16 years of Conservative Governments, one would suppose that the United Kingdom was in tatters. Why, therefore, is it the case that the City of London—I just happened to pick up a document at random the other day—appears to go from strength to strength? It should not he so, if the Opposition's comments are justified.
What do I read?
London is the world's largest international insurance market"—

not the second or third, but the largest—
with net premium income of £9.9 billion … There are over 540 foreign banks in London".
Would they come if the UK was as the Opposition portray it to be? Of course they would not. Moreover,
The London foreign exchange market is the largest in the world, with a daily turnover of $464 billion—more than the turnover of New York and Tokyo combined.
I know that other hon. Members wish to speak, but they will, I know, allow me to say that London is the world's second largest fund management centre, after Tokyo, with more than $750 billion of institutional equity holdings.
I might go on and on, but I cannot. By public demand—I should say by popular demand of my colleagues—I shall sit down. I simply finish by saying, it is a rattling and a damned good Budget. It has the whole-hearted support of Conservative Members and I fear that the Opposition will live to regret what they said before the Budget. If I remember rightly, they said that it would be a giveaway and would be recognised by the British people as such. It was no such thing; and just wait for the next one.

Mr. Michael Clapham: I am pleased to follow the hon. Member for Beverley (Mr. Cran) and I shall discuss some of his arguments later.
I very much enjoyed the contribution of my right hon. Friend the Member for Derby, South (Mrs. Beckett) and the speech of my hon. Friend the Member for Sherwood (Mr. Tipping), who spoke about several issues, and suggested ways in which the green tax might be developed.
In my estimation, the Budget has hit the most vulnerable people the hardest, to achieve a 1p reduction in income tax. It has hit the unemployed, single parents, the under-25s on housing benefit and disabled people on long-term hospital stays—all to achieve a reduction in income tax of only 1p.
The Budget has once again widened social divisions. I wonder where the Prime Minister's stated objective of achieving a classless society has gone. It certainly was not referred to in the Budget.
There is little cheer for little England in the Budget, because the typical family will pay £670 more per year in tax. They certainly will not be cracking open the champagne in Barnsley. My constituency, which comes into Barnsley, has a great deal of unemployment. Calculated on a narrow base over the travel-to-work area, unemployment in Barnsley is 18.1 per cent. of males. There are pockets in some mining villages where unemployment is much greater. It is as high as 40 per cent. in some mining villages.
The Chancellor talked of an enterprising Budget that would motivate entrepreneurs and the unemployed alike. That theme was echoed by the Secretary of State today, but I do not expect the Budget to make the economy more robust.
One factor overlooked by the Secretary of State when he spoke of the advantages that deregulation was bringing is its potential to act as a drag on the economy. That is particularly true following the abolition of the wages councils. A study carried out recently by the Low Pay Network showed that Barnsley had been severely affected


by that: for instance, 79 per cent. of relevant vacancies advertised in the town's jobcentre offered lower rates of pay than could have been advertised before the abolition of the councils.
The position is similar in a number of northern towns. According to a summary of the survey's findings, 69.2 per cent. of jobs advertised in Rotherham's jobcentre could not have been advertised at the same pay rates if wages councils had been in existence. In Walsall the figure was 66.1 per cent., and it was 60.7 per cent. in Halifax and Wigan. It is clear that a minimum wage should be introduced.
Opposition Members have long advocated such a move. If we are to lift people out of poverty, it is essential to give a greater stimulus to those who are looking for work. A minimum wage would also stimulate industry. It would do two things that Conservative Members never mention when they talk about the minimum wage. First, it would lead to innovative action by employers: that would boost the capital goods market, which in turn would require skilled labour. It would have a ripple effect throughout the economy. Secondly, it would free more labour for education and better training. In my view, a skills shortage is a significant barrier to competition. The availability of higher-level skills would, for example, enable manufacturing industry to use more capital-intensive processes. Taken together, those moves would nudge the United Kingdom's economy towards the higher-value end of the market—and that is where the United Kingdom must be if it is to survive in a ferociously competitive world market.
Low pay has proved to be a drag on the economy in the mining industry, for example. In 1913, before the first world war, we reached the zenith of mining production with 1,197,000 miners, but in Britain only about 13 per cent. of coal was cut by machine. In Germany, almost a third of coal was cut by that process. By the end of the war, two thirds of coal in America was cut by machine; in this country, we had hardly advanced since 1913. That was because of the availability of a glut of cheap labour. It took nationalisation after 1945 to bring technology into the mining industry. Cheap labour can hold back innovation.
Training and education—along with investment, of course—are major ingredients of prosperity, but the Government do not take that too seriously. Since 1979, the United Kingdom has slipped from 13th to 18th position in the world prosperity league table. If that statistic shows anything, it shows the Government's abject failure. It shows that we have not been directing enough money into investment, and that in that way we have allowed many of our industries to lag behind those of our competitors.
It is because education and training are so important that the Chancellor should have introduced a windfall tax. I know that the hon. Member for Beverley is opposed to that, but I believe that, since the privatisation of the utilities, local monopolies in electricity and water have made billions of pounds on the backs of their customers. As my hon. Friend the Member for Sherwood pointed out, Severn Trent admitted yesterday that its profits were up by 75 per cent. on last year. Even Yorkshire Water, whose pipe network is leaking at least a third of water supplies every day, announced that its profits were up by 50 per cent. The Secretary of State said that investment in the

water industry was increasing, but over a five-year period it has fallen by £282 million. That is an enormous loss of investment as a result of privatisation.
The Chancellor should have seized the opportunity to use the excessive profits of the utilities to invest in education and training. That would have given young people a chance to acquire the skills that would help them to secure jobs. Is there any better way in which to use those excess profits than to invest them in the nation's future?
No doubt the Chancellor will have had his eye on the proceeds that are likely to result from the sale of the nuclear generating industry next summer. That, too, is a privatisation too far. It is estimated that the price will be about £2.6 billion, which is less than the cost of building the Sizewell pressurised water reactor. The Chancellor talked of competitiveness and competition, but the sale of the nuclear industry will further neither objective. Energy prices are one of the elements that increase competitiveness, but since the privatisation of the electricity industry—contrary to what the Secretary of State told us—the cost to large users has not fallen. In fact, the cost to large users in the United Kingdom is much higher than that in most of our European competitors. It is far in excess of the cost in France, for example.
The creation of the two new nuclear companies will not help competitiveness. Magco will take on the Magnox stations, and will go over to British Nuclear Fuels Ltd., and British Energy will own the five advanced gas-cooled reactors and the pressurised water reactor. Between them, they will supply between 25 per cent. and 29 per cent. of the United Kingdom's electricity needs. As all that is base-load electricity, there is bound to be a stream of revenue following privatisation. After the privatisation of the nuclear generating industry, it is more likely to diversify into gas. Once the gas stations are on stream they will not compete with nuclear capacity, whose base-load electricity is bid into the pool at zero. So the new gas capacity will compete with other gas stations or with coal. It is therefore likely that the coal stations will be pushed off the grid.
Privatising the nuclear industry is folly. It will not help to diversify our fuel mix, and it will not improve our competitiveness. Indeed, prices in the energy market may rise thereafter.
It is accepted even by Conservatives that we invest much less than do our competitors. Japan invests twice as much as we do; America invests £863 per person more; and Switzerland a massive £2,766 more. Conservative Members like to talk about 1979. In 1979, Portugal invested £177 per head less than did the United Kingdom. Now it invests £312 more than we do.
Furthermore, the Budget, besides not increasing investment as required, did not sufficiently encourage investment in the areas that need it. The Government had the opportunity to create an arms diversification agency to harness expertise and capital from the armaments industry as it adapts to civil production. But Conservative Members seem to find that idea anathema.
What is more, this country needs more research and development. We have cut back dramatically our investment in clean coal technology, an area in which we once led the world. The danger is that the same could happen to the nuclear industry after privatisation.


Research and development are the seedcorn for the future, and the Chancellor should have provided much more encouragement for them—but chose not to.
Research and development need to be focused on civil, not military production. That would allow spin-offs from civil R and D to the military, instead of the other way round. Germany and Japan have shown what can be achieved when research and development are focused on civil production, with spin-offs for military production.
Overall, the Budget did nothing for unemployment. The Government have put taxes up by 7p and lowered them by 1p, still leaving the typical family paying £670 more in tax. The Chancellor has failed to come up with a Budget for investment, to increase prosperity and to ensure the UK's competitiveness in world markets.

Mr. Richard Spring: Thank you, Madam Deputy Speaker, for giving me the chance to say a few words.
I agree with my right hon. Friend the Member for Worthing (Sir T. Higgins) that a Budget that is cheered to the rafters often looks less appetising six months on. The headline in The Sun confirmed for me that this Budget will be the opposite sort, in which my right hon. and learned Friend the Chancellor has introduced some sensible tax cuts, targeting key spending areas and producing a number of important innovations.
Bryan Gould, who has now left us for New Zealand, used to talk about the Labour party's lack of any sort of macro-economic policy in the key areas of interest rates, exchange rates, taxation and monetary policy. He said that Labour had no such policies. It was thoroughly disappointing again this evening to hear the speech of the right hon. Member for Derby, South (Mrs. Beckett), which contained no policies, ideas or opinions: just criticisms. Her performance served to show the vacuum in Labour party policy.
My right hon. and learned Friend sought to deal with many challenges in his Budget. I should like to examine two of them, the first of which is not essentially a party political issue. Ours is an aging population. An ever smaller percentage of the population works to support an ever larger element in retirement. There is no escaping that fact. The implications for fiscal policy and for public borrowing are critical. I am pleased that my right hon. Friend the Secretary of State for Social Security is paring back the increases in the billowing social security budget from 3 per cent. to 1 per cent. a year.
It has become something of a cliché to talk about global markets and communications, but the fact is that Governments' ability to control events outside their borders, if markets do not like the policies that they are pursuing, is strictly limited. We live in a time of open markets and of ferocious attacks on currencies. As an older, mature economy, it is our duty to ensure that we run a low-inflation, low-tax economy if we are to compete with the emerging economies in the far east and elsewhere. We have no option in the matter if we are to face up to the changing demographic balance in this country and in other industrialised nations.
In this respect I welcome the announcements affecting the problem of long-term health care for the elderly. Many elderly people have been very worried about the thresholds, which have now been raised from £3,000 to £10,000 and from £8,000 to £16,000. That represents a serious move on the part of the Government, who, like Governments in all industrialised countries, have had to face up to the problem and to lay the foundations for long-term care provision. That involves creating the right sort of fiscal programme.
The Government and the Chancellor have sought successfully to encourage savings, with the introduction of PEPs and TESSAs and the extraordinary increase in the number of personal pension arrangements that help people sensibly to plan for major demographic change—in this country and across the industrialised world. In that respect this Budget marks a watershed.
Investment is crucial to our survival in this competitive world. There has been a huge improvement in manufacturing productivity and in inward investment to the UK from outside Europe. That has enabled us to compete well by attracting scarce capital. It is creating jobs, new technologies and industries that are extremely beneficial.
Since the end of the second world war, every time there has been economic recovery, we have had a sterling or balance of payments crisis. So many of the nationalised industries that were damp hands on the economy in the 1970s are now leading our export effort and showing the rest of British industry the way forward by creating employment, producing taxes and helping to ensure that our export performance is excellent by the standards of the past 30 or 40 years. It is interesting to see the transformation that has taken place in that respect.
To achieve our aim of being the enterprise centre of Europe, we have to continue to cut tax as a percentage of GDP. I am pleased that Government expenditure as a percentage of GDP is projected to fall to 40 per cent. in 1997–98 and to 38 per cent. two years later. Let us aim for 35 per cent.—the levels that apply in Japan and the United States. If we continue to reduce that percentage, we shall bequeath a vibrant and dynamic environment in which business will prosper.
I very much welcome the private finance initiative, which will address the enormous pressures on the social and transport infrastructure of Britain and all other mature industrialised countries.
I welcome the further expansion of the 20p tax band, which means that 200,000 lower-paid people will be taken out of taxation altogether and one quarter of all taxpayers will now pay only 20p. I applaud the fact that my right hon. and learned Friend set a clear marker to a 20p tax rate. There are no gimmicks; we are on our way to achieve that.
Those policies have produced quite exceptional results in Britain. Unlike the other industrialised countries in Europe where unemployment is growing, in Britain it has fallen by 700,000 in the past three years. In my own constituency, the unemployment rate is now 4.3 per cent, having dropped by 8.4 per cent. in one year and 35 per cent. in three years. That success is reflected in the lives and aspirations of my constituents and I look with pleasure at the effect of Government policy in the part of west Suffolk that I represent.
I should tell my hon. Friend the Economic Secretary that I personally welcome the vehicle tax exemption on 25-year-old cars. I have a 1973 Rover 3.5 litre coupé. The car looks forward to being two or three years older and escaping that taxation.
I thank my right hon. and learned Friend and the other Treasury Ministers for addressing the problem of general betting duty. I have the great pleasure of representing the world's headquarters of racing in Newmarket. The national lottery has had a serious impact on prize money in the racing industry. The cut of 1 per cent. in general betting duty will stimulate the employment gains that are already developing in the industry as a result of the VAT registration concessions given in the Budget three years ago. On behalf of my constituents, as the racing industry is the largest employer in my constituency, I thank the Treasury team for that important concession which will be highly valued in even further reducing the already low rate of unemployment in Bury St. Edmunds.
Finally, my right hon. and learned Friend has produced a coherent, sensible and restrained Budget. In 12 months' time it will be possible further to extend tax cuts to produce a lower rate of inflation in a growing economy. The Budget is a watershed as we have turned the corner from a recessionary era into a period of sustained growth and low inflation. I welcome it and congratulate my right hon. and learned Friend on presenting it so well.

Mr. David Congdon: It is a pleasure to be able to take up the remarks of my hon. Friend the Member for Bury St. Edmunds (Mr. Spring), who serves with me as a member of the Select Committee on Health. I echo his comments about the growth of the elderly population and the proposals in the Budget, which I welcome, that are designed as a first stage to deal with the difficult problem of providing long-term care for the elderly.
I warmly welcome the Budget as a whole. I think that my right hon. and learned Friend the Chancellor of the Exchequer got it right. Some difficult decisions had to be taken, especially given the state of public finances.
The key to economic success is the achievement of sustainable growth. There is no doubt that in 1994–95 and beyond we have and will achieve that growth. One of the judgments of the Budget is whether we shall continue to achieve sustainable growth. I believe that we shall do so, and I think that most economists would share that judgment.
What do businesses ask of the Government in managing the economy? The answer is that they want stability. They do not want the old days of stop-go, when they boosted their production only to find that it had to come to a halt as the economy went into recession as a result of overheating. Businesses want stability. They want stable inflation, stable growth and stable interest rates so that they can plan sensibly. The Budget is prudent in its judgment on public finances because tax cuts are balanced by reductions in public spending. Surely that is the way in which to proceed.
It is important that tax cuts put money back into the pockets of the public. The cuts will have a significant impact on consumer expenditure. Despite the comments of Opposition Members, the public know better than the Government how to spend their money.
There is a danger that Budgets can be over-hyped. We heard so much nonsense before the Budget about the level of tax cuts that would be achieved. As I have said, my right hon. and learned Friend the Chancellor got it right with cuts of £3.25 billion, which were balanced by cuts in public spending. More important, does the Budget pave the way for reductions in interest rates, which would be much appreciated by businesses and mortgagees throughout the country? I believe that it does, and I urge my right hon. and learned Friend, in his meetings with Eddie George, to adhere to the tough line that he has adopted and go for interest rate cuts.
It is my view that the Governor of the Bank of England has been wrong about interest rates over the past year. The issue is crucial to understanding why my right hon. and learned Friend the Chancellor had limited room for manoeuvre this year. I spoke in the Budget debate last year, when none of us knew what growth rate would be achieved in 1994. We now know that we achieved a growth rate of 3.9 per cent. There was concern about whether the economy would overheat and whether inflation would get out of control. We have seen some increases in interest rates. If my right hon. and learned Friend had followed the Governor's lead, we would have higher interest rates.
What have we seen? In the Red Book, growth for 1995 was predicted to be 3.25 per cent. That was only a forecast. In the summer forecast it was scaled down to 3 per cent. It is now forecast to be 2.75 per cent. We know that in the third quarter it was down to 2.1 per cent. In other words, interest rate cuts have had an effect, along with the slow-down in the world economy, on the growth rate of our economy.
What has been the effect of that slow-down? Tax revenue has been reduced significantly. I understand the exact reasons for the reduction in tax revenues. It is a problem that affects other countries. We know for certain, however, that a slow-down in growth will have an impact on tax revenues. We know also that £7.5 billion is an enormous sum. The Government have had to face difficulties with the public sector borrowing requirement, but we have been extremely successful in keeping spending under control. That is a key achievement.
What better position would we have been in if tax revenues had held up? My right hon. and learned Friend the Chancellor might have been able to introduce further tax cuts. My message and plea to the Treasury Bench is that we should not be too cautious over the next 12 months. Let us see growth in the real economy. There is little sign of inflation taking off. Wage increases, for about the first time in our history, are below the rate of inflation. That is extremely good news.
At the same time, the slow-down in wage increases has had an effect on growth. In other words, there are some difficult balances. We must ensure that we achieve at least the levels of growth that are predicted in the Red Book. I would hate to have to say next year that we achieved not 3 per cent. but 2.5 per cent. I do not accept the argument that the underlying trend rate of the economy, which some say is 2.75 per cent., while others claim that it is 2.5 per cent., is fixed in stone for ever and a day. It depends on the improvements in productivity that industry is achieving, and there is no doubt that in recent years industry has become much more productive and successful. That should be borne in mind.
The debate has been fascinating. We hear a lot about new Labour and how the party has changed its ways, but listening tonight, particularly to the hon. Member for Barnsley, West and Penistone (Mr. Clapham), I thought that I must be in a time warp. The hon. Gentleman had some quaint ideas about a minimum wage encouraging investment in capital equipment. It might well do. That is not quaint. But it would have a disastrous effect on unemployment.
We also had a revelation that I have heard on previous occasions, again from the hon. Gentleman but also from other hon. Members, about Government directing investment. What a disaster it would be for Britain if the Government were to decide where investment should go. Government would never get it right when it came to deciding in which industries to invest. The only people who can judge where to invest are those in the businesses themselves.
We hear a lot about underinvestment. Investment is up, but the Opposition concentrate on public sector investment, as if that constituted the greater part of investment. I looked in the Red Book earlier to see whether my understanding of investment was correct. In broad terms, investment in Britain is running at about £100 billion a year. Of that, only about 20 per cent. is public investment. The vast bulk of investment is decided by businesses and industries throughout the land. They invest only when there is a stable macro-economic framework and they can see a demand for their product. That is why the Government are so right to have the sound economic policies that they have.
Listening to Opposition Members on public expenditure, I sometimes wonder whether they are being honest with the electorate. Earlier this afternoon we were told that we had squandered our oil revenues and privatisation receipts. But what have they been "squandered" on? They have been spent on essential public services. Since 1979, an extra 70 per cent. has been spent on the health service. Spending on education is up 50 per cent. per pupil. There has been a £70 billion increase in real terms in public expenditure since 1979. I do not recall hearing Labour Members say that we should not put more money into health or education. Therefore, it is dishonest of them to try to pretend that that money has been squandered.
To return to the specifics on public spending in the Budget, I applaud strongly the fact that my right hon. and learned Friend has found room for extra spending on essential services. I am particularly pleased to see the £1.3 billion extra—1.6 per cent.—for health, as well as the £878 million for education. Surely those are the right sort of priorities to have. We should cut out waste and inefficiency and spend money on essential services.
My right hon. and learned Friend the Chancellor has the Budget strategy right. It is a prudent Budget. I urge my right hon. and learned Friend to keep an eye on the ball of interest rates in order to ensure that we have the growth that the economy needs in the coming year. We must aim to ensure that we achieve at least the 3 per cent. set out in the Budget statement so that we are on target for the sustainable growth that the country wants and demands.

Mr. Jacques Arnold: When my right hon. and learned Friend the Chancellor sat down on Tuesday, we all heard a somewhat strangled cry of, "Is that all?" It came in jeering tones from the hon. Member for Bolsover (Mr. Skinner) and in anguished tones from the Press Gallery. The gentlemen of the press had already written their headlines and articles. Those headlines read, "Panic-stricken Tories wreck Government finances and shatter recovery". They went on to long articles about scorched earth and things of that sort, assuming that the Conservatives would throw in the sponge and give up on the Government.
That just proves that the gentlemen of the press do not understand the Conservative party. Not only do we intend to win, but we want to carry out our patriotic duty and, in so doing, we will regain the support of the public because they will respond with the respect that has led us to victory after victory at the polls.
The appropriate headline for the Budget is, "Boring but responsible". It is clearly tackling the deficit. It is continuing the tight control on inflation. It is tightening up the control on borrowing. Indeed, it is creating the conditions for the interest rate reductions that we want to see. I am frustrated that we have not yet seen them, and that, of course, is because we handed over the decision to the Governor of the Bank of England. I ask my right hon. and learned Friend the Chancellor to give Eddie George his marching orders and get those interest rates down, because they will accelerate growth and will cut unemployment. Indeed, in my constituency, unemployment is already down to the level of April 1991 and is continuing to drop steadily.
A drop in interest rates would also bring about a recovery in the property market. It would be good for business and for home owners, but not quite so for savers, and that was one of the more significant aspects of the Budget. It did not escape our notice that my right hon. and learned Friend created a 20 per cent. tax band on savings, which would offset the effect on savers of the reduction in interest rates that the economy, home owners and the public wish to see.
The Budget is good for education, good for health and good for the police. This afternoon, we heard that there was an extra 4 per cent. for schools in my constituency. But those very services sowed the seeds of our current conditions, because we have just been through the worst recession since the 1930s, and any financially responsible Government would have responded to a drop in revenue by cutting their expenditure. Yet the Conservative Government continued to increase expenditure on health to the extent that today it is up 70 per cent. in real terms on the figure left behind by the previous Labour Government. We continued the increase in spending on education, which is now up by 50 per cent. We protected the pensioners.
Contrast that with the Labour Government who preceded us. Let us remember the Labour Government in the recession of 1976, when they slashed the hospital building programme. They cut the pay of nurses. They cut the pensioners' Christmas bonus. But even that did not work and they carried the begging bowl of this proud country to the International Monetary Fund to queue up behind the sub-Saharan countries for a loan. We did not have to do that. Why? Because the Conservative Government have a reputation for sound finance. The


trouble is that one does not keep that reputation if one continues to borrow heavily. That is precisely why, during the past three very difficult years, we had to borrow and, above all, taxes had to be increased.

Mr. Harvey: Will the hon. Gentleman give way?

Mr. Arnold: No I will not, because I am short of time and the hon. Gentleman has just walked in.
I shall press on by saying that we have now got through the difficult period. We are now in the great period of getting off the backs of the taxpayers. It is interesting to note where we have done that. We have got off the backs of the less well-off. We have the 1 per cent. cut in the basic rate. The personal allowance is up by £240 and we have the extension of the 20 per cent. band, all of which will help the less well-off into jobs and help them and their families to greater prosperity.
I would argue that that it is not enough. But where are we to make the cuts? We have seen thoughtful proposals from my right hon. Friend the Member for Wokingham (Mr. Redwood), with his proposals for £5 billion of cuts, which should be handed back to the public.
The Budget is intellectually honest, but what is not, however, is the approach of the Labour party, particularly the speech of the hon. Member for Dunfermline, East (Mr. Brown) the shadow Chancellor. He was jeering over tax. Would he cut tax more? If so, what would he cut to finance it? He would not answer. His comments about the poor taxpayer of Britain are just like the devil worried about sin. What a nerve. In the debate on Wednesday, he was asked question after question. He did not answer. I asked him how he would finance the cost of his 10 per cent. rate. No answer. My hon. Friend the Member for Blackpool, South (Mr. Hawkins) asked him what would be the impact of the social chapter and a statutory minimum wage. No answer. My hon. Friend the Member for Beaconsfield (Mr. Smith) then went on to ask him about the 20 per cent. band extension at a cost of £800 million and asked whether the hon. Gentleman would support it. He did not answer then, any more than we will get an answer yes or no from the official Opposition to the Budget.
My hon. Friend the Member for Wyre Forest (Mr. Coombs) then asked the shadow Chancellor what target he had for inflation, referring to the 27 per cent. inflation that the last Labour Government achieved. Again, no answer. This is the person who would run our economy in 18 months' time, if one believed him and some of the pundits.
One of the most interesting parts of the Budget was the private finance initiative. It is thoroughly new and a great departure. Let us remember that this reforming Government progressively introduced local financial management to schools, which progressed to grant-maintained schools, which are very effective in delivering the goods. In the national health service, the Government introduced fundholding practices and NHS trusts, which again are delivering the goods. I find it a matter for great optimism that we Conservatives are still coming up with the new projects.
On the private finance initiative, I will cite the example of the NHS in my constituency. We have been waiting year after year for our brand new general hospital at Darenth park at a cost of £100 million. We have not go

tit. Why? Because the Chancellor of the Exchequer cannot sign a cheque for £100 million. The Treasury keeps saying, "How about sticking the hospital on a ropey old site?" We combine the ropey old facilities with the phased development of our hospital. Now that the project has been put out to the PFI, what does the private sector opt to do? It says, "We would build it all in one go, on the better site at Darenth park and we can do it on the following financial conditions." The PFI is a major departure and will get the massive new capital projects that we need in the NHS and elsewhere.
I strongly support the Budget. It is a step on the road. At the next Budget, when we have much more scope for tax cuts, let us make it a Budget for the family.

Mr. Mike O'Brien: This has been a good debate—there have been some interesting contributions from both sides of the House—and I welcome the opportunity in this, my first speech from the Opposition Front Bench, to welcome it.
I should declare an interest. I have been the parliamentary adviser to the Police Federation for the past two years. I shall cease to have that role at the end of the month, but it is right that hon. Members should be aware of it.
Perhaps I might begin on a positive note. I have always taken the view that it is not in the interests of an Opposition to criticise and oppose. We should also support and encourage a Government, where that is possible. Mere party political posturing does nothing to enhance the public's view of politicians. I want to make it clear that the Labour party welcomes aspects of this Budget.
The raising of the benefit threshold for pensioners in long-term care is a positive move. The previous levels were low and the increases from £3,000 to £8,000 and £8,000 to £16,000 respectively will spare some pensioners a bill for long-term care, especially since the Government had frozen the thresholds since 1988, thereby making the problem worse.
Nevertheless, £16,000 will not prevent the sale of the matrimonial home. Long-term care is a serious issue with enormous implications, as the hon. Members for Bury St. Edmunds (Mr. Spring) and for Croydon, North-East (Mr. Congdon) said. It is difficult for any Chancellor easily to resolve that issue, but the Government have taken a step forward. I suspect that there will be many further debates on the issue before we get it entirely right.
The Labour party also welcomes the proposals to help and clarify the position on share ownership. We too believe that employees should be encouraged to take a share in their firm. We shall consider with care the proposals that the Chancellor details in the Finance Bill and, if we can, we shall be supportive.
The call for a simpler and more coherent tax regime is also welcome. Indeed, it is something for which Labour has called for a long time. I seem to remember that, in the Standing Committee debate on the Finance Bill last year, our votes, with those of the hon. Member for Beaconsfield (Mr. Smith), pushed through a resolution. Although we must ensure that the detail of the legislation is simplified, we must also ensure that we do not create new loopholes. Nevertheless, the wording of tax law tends


to be incoherent to the ordinary person at times and it is good to see a real attempt being made to come to grips with the issue.
I was amused by the confession of the right hon. Member for Northavon (Sir J. Cope) that he contributed so much towards the great detail of our tax laws, although I am not sure how advisable it was to confess it to the many small business men in his constituency who no doubt have had great trouble working out their tax bill. I bet that he will get the accountants' vote.
My Scottish colleagues have campaigned long and hard to bring the duty on whisky down, and the 4 per cent. cut in whisky duty will be helpful. The issues of cross-border sales—bootlegging—are complex, as the Treasury and Civil Service Select Committee agreed in its recent report. What the Chancellor has done is not a solution to the problem but merely an interim measure and the Treasury must now explore all the options. I hope that the Minister will be able to set out how the Government seek to achieve some of the aims and conclusions identified in the Select Committee's report.
The right hon. Member for Worthing (Sir T. Higgins), as befitted a former and much respected Chairman of the Treasury and Civil Service Select Committee, gave a balanced speech. He supported the Budget but conceded that it had not been well received, especially in the press, and hoped that it would be better appreciated in the months to come. He may live in hope—but it will be in vain, I suspect. The right hon. Gentleman was right to draw attention to the slowing of the economy and to say that unemployment had not fallen as much as the Government had hoped. I shall return to the subject of unemployment later.
My hon. Friend the Member for Sherwood (Mr. Tipping) made a valuable contribution. He expressed his concerns about some spending and questioned several spending programmes, especially the countryside stewardship programme and the arable areas scheme for set-aside. He raised the disturbing issue of the Government's refusal to answer questions about the number of farmers who receive more than £1 million, and about what was the highest sum received. I hope that the Economic Secretary to the Treasury will be able to reassure my hon. Friend on those subjects. If she cannot do so today, perhaps after she has had the opportunity to read his speech she will make inquiries about the matters that he raised and deal with them in correspondence.
My hon. Friend also made a strong plea for help in his constituency to deal with transport issues. I was pleased to see that a Minister from the Department of Transport took the trouble to listen to him, so I hope that the Secretary of State for Transport will do something about those problems.
It was interesting that the hon. Member for Beverley (Mr. Cran) described the Confederation of British Industry's response to the Budget as tepid and somewhat dismissive. That is not what the President of the Board of Trade said earlier. I wonder whether the Government are divided not only on Europe, but on the size of the tax cut and on their attitude to the CBI.
My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham), in a strong speech, described the low wages that were on offer in his constituency as a

result of the abolition of the wages councils. He said that the Government had promised much in the way of extra jobs, but that the jobs had not come.
The hon. Member for North Devon (Mr. Harvey) raised a number of issues. He called the Budget a missed opportunity, said that unemployment in the construction industry was especially high, and called for something to be done about that. He also pointed out that the increases in council tax would probably be three times the rate of inflation.
The hon. Member for Bristol, North-West (Mr. Stern) made a learned contribution, and as he is an accountant he used his considerable knowledge of balance sheets. He warned that the Government had champagne tastes but a beer income and called for more stringent cuts than those delivered in the Budget. In defence of the Chancellor, let me say that I fear that the hon. Member for Bristol, North-West sounded like the quiet cold voice of the man from a warm office who makes decisions about people's lives without balancing logic and calculation with the need for humanity.
I shall now consider the Budget as a whole. It was a give with one hand and take with the other, something and nothing, a 7p up, 1p down Budget, and it left the typical British family £670 worse off than when the Tories were returned to office in 1992. It followed news that Britain had fallen from 13th to 18th place in the league of international prosperity since 1979. After the Budget, Britain is 18th and still falling.
The Budget did nothing to tackle unemployment, to deal with job insecurity, or to heal the wounds of a divided society. It did nothing to tackle the fundamental problems of the British economy, such as the failure over 16 years to encourage long-term investment. It did nothing to provide incentives for the people in the one in five non-pensioner households with no wage earner to move from welfare to work.
My hon. Friend the Member for Sherwood also made a strong plea for Britain's young people, one in six of whom are out of work. They are Thatcher's children, and too many of them have been left disillusioned, impoverished and without prospects. What are we here for if not for them? Our young people want jobs, hope and opportunity. They want to make a contribution, but the Chancellor's message to them is that he is restricting the amount of housing benefit for single young people. His hope is poverty, his opportunity is the dole queue and his reward will be the further conviction that the Government do not care for younger people and, perhaps, their future alienation from the political process.
The Chancellor complained that housing benefit should not induce young people to leave their families before they need to. Did it not occur to him that what young people want is jobs, skills and training? If he enabled them to have those things, they would be able to support themselves sooner and would not need to look to their parents or the state to provide financial support.
It is because our young people are important to the nation that Labour made its key spending pledge a new deal for Britain's under-25s. We are not prepared to see a generation of young people abandoned. Already in our inner cities—in Glasgow, Merseyside and inner London—one in three young people are without a job. In London, six out of 10 young black men are jobless. Some


280,000 young people have been unemployed for more than six months while 200,000 young people have never had a job.
Labour proposes to give young people jobs, not schemes. We offer each young person a number of options: an employment option, with a job and a real wage; a voluntary sector option; an option to contribute to our environmental task force; and a full-time education option if the young person lacks basic educational qualifications. To pay for that programme, Labour would impose a windfall tax on the excess profits of the monopoly utilities.
We have seen the size of the profits that those companies are declaring. On Tuesday, Severn Trent admitted that its profits were up by 75 per cent. last year. Yesterday, Yorkshire Water—the company responsible for a third of the country's unplanned and unwarned interruptions in water supplies in the past two years—announced that its profits were up by 50 per cent.
Contrary to what the President of the Board of Trade said at the start of the debate, soaring profits have not encouraged the increased investment needed by those privatised utilities. In the five years since privatisation, capital investment in the water industry has fallen by a total of £282 million. In the same period, profits in the water industry have risen by some £755 million. When it was privatised, the water industry received a £6.5 billion hand-out from the taxpayer in debt write-offs and green dowries. While profits have risen, investment has fallen and, on average, the bills of customers have gone up by 40 per cent. in real terms since privatisation.
Higher water bills are just one example of how families are worse off under the Tories—higher bills, higher charges, higher taxes. That is why a windfall tax would make a contribution to putting Britain's young people back to work. Such a policy would help to reduce benefit bills in the long term and restore hope to our young people.
This Budget was never about Britain or its people, young or otherwise. It was about the Tory party and its divisions. The Chancellor is a one-nation Tory presiding over the fag end of a Government who used to believe in Thatcherite economic policies. As my hon. Friend the Member for Swansea, East (Mr. Anderson) said in a good and balanced speech, the Chancellor knows that the public services are overstretched. I do not doubt that he would like to do something about that, but he knows that he must deliver cuts in the basic rate for the right wing of the Tory party, which worries that the Thatcher legacy is going down the tubes.
Trying to balance the two, the right hon. and learned Gentleman ended up with a package with no overall strategic direction on the economy and no sense of vision for society. It was an attempt to shore up the dissipating Tory vote by scattering alternatively small token tax cuts and shifts in thresholds. Conservative Back Benchers hoped that the Chancellor would buy them votes with tax cuts, but even they know that the vote of the British people is not for sale any more.
I must confess that I have a sneaking regard for the Chancellor. I recall attending this place as a student in the early 1970s and watching the right hon. and learned Gentleman cross swords in an education debate with—if I remember rightly—Shirley Williams, and he appeared very able then. When I was elected to this place, the right

hon. and learned Gentleman was Home Secretary. I was put on the Home Affairs Select Committee and I had an opportunity to see him in action. When he became Chancellor, it so happened that I was moved to the Treasury and Civil Service Select Committee. I always thought that the Chancellor was an able performer, and I told my colleagues in the shadow Treasury team that he would come up with something creative, new, innovative or bold, but he disappointed me—almost as much as he disappointed many Tory Back Benchers.
The story of the Budget was told on the glum faces of Tory Back Benchers who filed out at the end of the Chancellor's speech. They had been led to expect flair and imagination; instead, they got a weary, dead-end, dead-beat, dead-loss Budget.
The hon. Member for Beverley sits there with a grin on his face. He denies that Tory faces were so glum at the end of the Budget statement. I recall their looking glum, but I bet those who did not realise that they had every reason to be glum did so when they read the Daily Mail and The Sun the next day.
The economic recovery is so precarious that the Chancellor had little room for manoeuvre. He ended up with a combination of 1p off income tax while putting £9.5 billion on borrowing next year. What price this Chancellor as a sound money man now? The public sector borrowing requirement forecast for 1995–96 has been revised upwards from £23.5 billion in the Treasury summer forecast and from £21.5 billion in the last Budget. It is now £6.5 billion higher than expected in 1995–96, at £25 billion. It will be £9.5 billion higher than expected in 1996–97 and £10 billion higher than expected in 1997–98. That is because the economy is in a mess. Throughout the past 16 years, the Conservatives have neglected investment, squandered the proceeds of North sea oil and, in a display of boom-and-bust economics, put us into the two worst recessions since the war. That in turn has damaged industry's ability to respond to recovery.
The Budget forecast for investment growth in 1995 is now just 1per cent. The recovery, such as we had, is now precarious and in danger. It was based on an export-led drive, fuelled by a 20 per cent. devaluation of the pound following our ignominious withdrawal from the exchange rate mechanism. But there is a limit to how long we can run the economy on devaluing our currency. This Budget has not dealt with some of the long-term problems of the British economy. It has simply put off resolving them until after the next election, when Labour will be there to deal with them.
It is the ordinary families of Britain whom the Government have really let down: the workers on the assembly line or in the office. For them, right-wing economics have too often meant little or no wage increases in the name of competitiveness, job insecurity to make labour flexible, and the fraying of the safety net. Middle and lower-income people spend more hours working and less time with their children, and they bring home an income that is inadequate to meet housing and other costs. In 1992, many of them voted Tory on promises of lower taxes and opportunities to get on in life. They now feel that the Government have failed them and betrayed their values. For them, Tory promises of opportunity have often meant increased opportunity to lose their jobs.
The failure to reduce unemployment since 1979 has left people paying for big welfare bills of £20 billion, the equivalent of £20 a week for each family. People have seen tax breaks for the very wealthy go unchecked. Their experience of the services that they use, such as schools and hospitals, is of increased commercialisation and financial restraint. They see the immorality of a Government who stand by while a tiny elite prosper and our economic base erodes. They question the fairness of sacrifices made by middle-income families, who must pay higher taxes while, at a time of high dividends, some corporations have paid little tax by taking advantage of tax loopholes that the Government have failed to plug.
The damage done to British families determines Labour's stand on the reduction by 1p of the basic rate of income tax. We cannot vote for it because it does not tackle the fundamental problems of the British economy: lack of investment and lack of jobs. It does nothing to create an incentive to move from welfare to work for the one in five non-pensioner households that have no wage earner. We shall not vote against it because the Tories have damaged British taxpayers enough. They have imposed the biggest tax hike this century—in the year after the 1992 election—beating even Geoffrey Howe's 1981 Budget when personal allowances were not indexed.
Even now, the overall tax burden will be 36.5 per cent. next year, up from 34.75 per cent. in 1992. That is more than when Labour left office. It is forecast to rise each year until the end of the century, reaching 37.5 per cent. by 2000. That is the Tory burden of failure paid by the British people. Labour will not vote to make it worse. Poorly aimed as it is in economic terms, the 1p off the 7p at least gives small relief from the Tory tax rises and broken promises of the past few years.
The Chancellor hoped that his Budget would give the Government the chance to start to build up momentum for the general election. In that judgment he was unsound. He has no clear view of where he is going. He has not addressed the fundamental problems of the economy and he presented no solution to them. The Government are still playing at the game of trying to extend the policies of the 1980s, the me decade, into the latter half of the 1990s. No matter that a crude free market policy and trickle-down economics, which were supposed to lift all the boats, have instead lifted only the yachts and damaged the harbour.
Labour rejects all such economics. We want to move from the me decade policies and make the 1990s the we decade, where the whole country moves forward together. Unless the many prosper, none will really benefit. It is for that reason that the electorate will not be conned by the Tory promises in the Budget or at the next general election. The Government have got it wrong too many times. They have got it wrong this time, too and the electorate know it. That is why, when the time comes to make a decision, they will reject the Government.

The Economic Secretary to the Treasury (Mrs. Angela Knight): First, I congratulate all those hon. Members who are still here late on Thursday night when Parliament is not sitting tomorrow. We certainly had some

interesting contributions in the debate, some considerably more factual than others. I thank my hon. Friends for their factual contributions.
The Government's overall economic objective is to promote sustained economic growth and higher living standards. This Budget concentrates on securing Britain's healthy, lasting recovery. It reduces unemployment, continues to reduce borrowing, lets people keep more of the money that they earn and spends money on the things that are important to them. It looks particularly to the education of the young, the job prospects of the working population and security and safety in old age. It continues to offer the best prospect that British people have faced for decades, which is to enjoy the benefits of growth. It is a Budget of substance.
My right hon. Friends the Members for Worthing (Sir T. Higgins) and for Northavon (Sir J. Cope) and my hon. Friend the Member for Gravesham (Mr. Arnold) expressed concern about some of the headlines in the newspapers the day after the Budget. They should not worry about that. Headline writers will always have a field day. They have had one with this Budget, but a headline in the newspaper is like a soundbite from the Leader of the Opposition; it lasts 10 seconds, but for content we have to look elsewhere.
The debate was opened by the right hon. Member for Derby, South (Mrs. Beckett), with what I felt was a snippy little speech. She went through her normal arguments against privatisation. She argued against the £90 electricity rebate that customers will get. She forgot to tell people that when those industries were nationalised, they cost the taxpayers £50 million a week; now, they contribute £55 million a week into the public purse. She forgot to say that when British Steel was nationalised, it was one of the biggest loss makers of all time; now, in private hands, it is profitable and a world leader. She even gave us a harangue against North sea oil. She did not mention the fact that Rolls-Royce in Derby has won a contract for over £1 billion for engines.
The speech of the right hon. Member for Derby, South, I submit, in no way represented the views of industry. Let us look at some of the views of industry. Mr. Archie Norman of Asda said:
We are delighted. It is a bullseye.
One of the major construction companies said:
The Chancellor is on the right track and the measures he has put in place provide the best prospects for the UK building industry.
An assistant in a clothing and footwear shop said:
The Chancellor has listened to the small people …it's brilliant news.
The chairman of ICI said:
I welcome the direction of the Chancellor's policy in reducing public spending and cutting taxes in a fiscally responsible way.
That is what industry said of this Budget. It has given the Budget a very big thumbs-up.
We heard criticism in the Chamber tonight of the private finance initiative. However, Labour seems to have little knowledge of the PFI and does not know what to think about it. The hon. Member for Edinburgh, Central (Mr. Darling) said:
Labour believes that the initiative has to be given fresh impetus",
but the hon. Member for Peckham (Ms Harman) said that the PFI is


a raft for a sort of ramp for privatising".
The Leader of the Opposition says:
We would get public and private finance working together in transport, in housing, in health and education",
but the right hon. Member for Derby, South says:
Market testing represents creeping privatisation. As does the Private Finance Initiative.
Labour is one party with two faces and two voices, and it is facing in different directions at the same time. Before Labour Members say one word more about the private finance initiative, I suggest that they go and look it up, find out what it is and see the projects that have been signed up.
The hon. Member for Swansea, East (Mr. Anderson) made a thoughtful speech. One of his concerns was that council taxes would go up. There was something extraordinary about his argument, because he seemed to forget that he and so many members of his party are in favour of no capping at all on local government. His party's proposal would simply result in people paying far more than they do now for local services.
I enjoyed the speech of my right hon. Friend the Member for Northavon. He is an experienced accountant and we all found very interesting the convolutions that he highlighted. I look forward to his contributions to the report on tax simplification, which I am sure will serve the Government and other accountants well.
The hon. Member for North Devon (Mr. Harvey) made a number of points, and I should like to pick up on two of them. He expressed concern about social housing. I assure him, however, that housing continues to benefit from substantial public capital investment. We are planning to spend more than £1 billion a year through the Housing Corporation and on housing association properties and, indeed, through the private finance initiative, which will bring new opportunities to housing and the construction industry as a whole. The Government have a target of a further 1.5 million home owners in the next 10 years. I hope that he is satisfied by those comments.
The hon. Gentleman's second point related to education. Education is the cornerstone of much of the Budget, and spending on schools is a top priority. The additional cash will be channelled through local authorities. My colleagues and I expect the local authorities to pass the money into the schools.
Having spent some years in local government, I am well aware of the complexity of the formulae that many local authorities use and of how they use that complexity to frighten parents. Many parents have been greatly worried about their schools' budgets. Many local authorities talk about cuts, but to give an example, it works like this: the reality is that it is a cut in a wish list. Thus, Madam Deputy Speaker, if you, for example, wanted a salary increase of £500 and received only £250, you would have a pay increase of £250. A local authority, however, would say that it had a £250 cut. That is the fallacy of the local authorities' argument. That is why their language is so wrong and why parents get so upset. It is why every hon. Member must get all the parents to ask their local authorities how they propose to spend the extra money for schools on their children.
I know that the hon. Member for North Devon at least has a policy. His party has a policy for a 1p increase in taxation for education. However, we have looked at his

shadow Budget, which contains about £6 billion of extra expenditure. That is apparently going to be paid for by tax changes—they are not called tax increases—of £1.1 billion. Another item is tax reform to the tune of £900 million. In his shadow Budget, the hon. Gentleman has £6 billion of extra spending, which is to be financed by £2 billion from extra taxes, all brought about by a 1p increase in the basic rate. It is as confusing a mess as I have described it. We therefore have to take what he had to say with a great pinch of salt.
My hon. Friend the Member for Bristol, North-West (Mr. Stern) spoke about the PSBR and made a number of detailed and complex points. Would he care to come and talk them over with me at a later date rather than in the Chamber tonight? I understand only too well his concerns about the need to reduce the borrowing requirement, and I agree that we should pull it back as fast as possible. He should not compare us too harshly with many of our European competitors, as we are the only country that has dealt with the pension problem properly. The finances of Germany and France show that if they do nothing about their pension schemes, their national debts will be about doubled. He should not have too many fears, as we are taking the right and prudent steps.
I apologise to the hon. Member for Sherwood (Mr. Tipping)—I nearly called him my hon. Friend, as more often than our respective Front-Bench teams would like, we agree with each other on our local radio station—for not being present when he made his speech. I understand that he talked at some length about green issues. The Budget contains a 15 per cent. reduction on duty on road fuel gases. I hope that that will at least go some way to meeting his concerns about green issues.
The hon. Member for Barnsley, West and Penistone (Mr. Clapham) spoke about unemployment. I looked at the figures for his constituency, where unemployment has fallen by 11 per cent. compared with this time last year and by more than 20 per cent. compared with the end of 1992. I am sure that he, too, welcomes the general fall in unemployment in this country and the fact that the number of people in employment is now higher than it was in 1979.
In an enthusiastic speech, my hon. Friend the Member for Beverley (Mr. Cran) touched on many important points, of which the housing market was one. I am grateful for his comments. Average mortgage repayments are now about £180 a month. I do not think that many people would be able to rent a similar property at that price. My hon. Friend also mentioned the considerable need to look at long-term care issues. I hope that he feels that the changes that we have introduced in the Budget relating to the increase in disregards, the assistance for elderly people in general and, specifically, the tax relief on care insurance will go a long way to meeting not just his concerns, but those of prudent, elderly savers.
I understand that my hon. Friend the Member for Bury St. Edmunds (Mr. Spring) is the owner of a vintage car, a betting man and no doubt likes a glass of whisky. I am therefore not too surprised that he had so much praise for the Budget. He rightly said that we are in a global economy, and he strongly supported Britain's aim to be the enterprise centre of Europe—a point also raised by my hon. Friend the Member for Croydon, North-East (Mr. Congdon). He also mentioned lower interest rates—his views will probably have been heard by my right hon. and learned Friend the Chancellor. But if my right hon.


and learned Friend missed them, I shall pass them on to him later—I am sure that they will also be passed on to the Governor of the Bank of England.
Low inflation and sound public finances are not an optional extra; they are necessary for a successful, expanding economy. Low inflation is essential because when inflation was high, it was the saver's enemy, the silent thief who stole the value of the pension. High inflation closed factories and took away jobs. That is why we have the 2.5 per cent. target. Underlying inflation has not been so low for so long since I was 11 years old. Compare that with 20 years ago, when inflation was running at 26 per cent. and it wiped out my grandfather's pension. That is why it is essential that inflation is low, and that is why it is one of our overriding aims.
We have a strong economy. Exports are good, business investment has picked up, consumers' expenditure is on a steady upward trend and unemployment has decreased by more than 700,000. No wonder Opposition Members always appear so unhappy.
In its recent report, the Organisation for Economic Co-operation and Development praised the British economy. It spoke about the importance of the British economy and its strength. I compare that report with the so-called world prosperity league table that Opposition Members have been running round with. I can presume only that the reason why they go round with that bit of paper is that it is a fig leaf to cover the bareness of their economic policies.

Mr. Jacques Arnold: They do not have one.

Mrs. Knight: We are the party which did a competitiveness audit, not last week or last month, but some time ago. We are the ones who have put in place measures such as those in the Budget, to ensure that our companies can compete better, that we get people back into work and that more people enjoy the fruits of their labour. However, when one considers the league table that the Labour party has been running round with, it is evident that it is one small corner of a much larger picture.
I return to the OECD report. It says that the UK's economic performance in 1994 was impressive. It says that our economy has been made more flexible and competitive and less inflation prone. It goes on to say that monetary policy is working well. It says that economic prospects are good.
If we are to continue discussing league tables, let us draw attention to the following facts. We are at the top of the G7 growth league table. We are at the top of the EU job creation league table. We are at the top of the European productivity league table. We are at the top of the European league table for exports. We are at the top of the European employment league table. That is where we are. When will the Labour party stop running the country down?
It is always interesting to note that, whenever we ask the Labour party what its policies are, we get no answers. My hon. Friend the Member for Gravesham reminded us of some of the questions that we asked yesterday and to which there was no reply.
Let us have another go now. When will Labour Members give us their inflation target? When will they decide what they will support in the Budget? When will they decide whether they support a 20p tax on savings? When will they finally confess that adoption of the minimum wage and the social chapter would destroy jobs and investment?
The Opposition are sitting tight today, exactly as they have sat day after day when we have asked them questions. Either they do not reply because they do not know, or they do not reply because they will not reply.
In a letter that the shadow Chief Secretary to the Treasury, the hon. Member for Oxford, East (Mr. Smith), sent to his colleagues, which was reported in the newspapers today, he told them that they must not imply that they will
manipulate public spending rules to smuggle through extra spending".
The hon. Member for Hackney, North and Stoke Newington (Ms Abbott) said:
Gordon can say anything he likes if he thinks it is going to win the Election … when Labour is in power
it
will be looking for other priorities
apart
from tax cuts.
There we have it. Labour smuggles through public expenditure, but does not tell anyone about it. In reality, Labour Back Benchers know what they want, and that is more spending, which means more taxation.
While the hon. Member for North Warwickshire (Mr. O'Brien) was studying for his law degree and lecturing in universities, I was working in industry. [HON. MEMBERS: "Hear, hear."] I worked in industry throughout the 1970s and 1980s, and during the 1970s Britain had a record that reads as follows. British industry was underinvested; we had an appalling strike record; we sold goods that no one wanted to buy at prices that rose weekly; the British Leyland work force was not buying the cars that it was making; inflation was rampant; in exports, we were losing our share of the world market. That was Labour's record. I say, "Never again!"
Interestingly, at that time when everything was wrong with the British economy, the political platitudes from the Labour party were exactly the same as they are today. That is the reality: it is an empty shell. As for the "7p up, 1p down" slogan, what nonsense! Not prepared to make difficult decisions—

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed on Monday 4 December.

PETITION

Joyriders

10 pm

Mr. Peter Mandelson: I beg leave to present a petition signed by 25,000 of my constituents, requesting urgent action to curb the crime of taking and using cars without the owners' consent, which has resulted in injury and death in our town. It states that the petitioners are
outraged by the death of Neil Wright caused by joyriders and youths who take vehicles without the owners' consent.
They feel that tougher penalties must be introduced
to prevent further death and tragedy.
The law in general must be reassessed. I hope that urgent consideration will be given to the petition.

To lie upon the Table.

Police (Information Technology)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

Mr. Walter Sweeney: I am grateful for the opportunity to speak about this subject.
Since 1979, the Conservative Government have increased the number of police by 13,000, and have substantially improved police pay, conditions and equipment. Despite that, crime has risen—seemingly inexorably—for most of that time. The public say, "We want to see more police on the beat." Despite the best efforts of my right hon. and learned Friend the Home Secretary, that is still the cry today.
I warmly welcome the Government's commitment to providing a further 5,000 police officers over the next three years. That will help to sustain the reduction in crime that has taken place over the past two years. We shall never be able to afford a police constable on every street corner, but the more that our police are visible to the public, the more the criminal will be deterred by the prospect of being caught and the more the public will be reassured.
In an age when criminals are equipped with fast stolen cars and mobile telephones, the police must spend much of their time in cars so that they can respond quickly. Each time that an arrest is made, the suspect must be taken to the police station and must then be laboriously processed in accordance with the Police and Criminal Evidence Act 1984, which takes at least one extra officer off patrol or the beat for a long time. It is vital to the efficiency of the police that we make full use of information technology to improve detection and the rate of conviction and to reduce the amount of time spent on administration. That will reassure the public, deter the criminal and help to prevent crime.
Of course, the Government and the police are to be congratulated on many new initiatives. The first national computerised DNA data-base went live in Birmingham on 10 April this year, and represents a huge step forward. Phoenix, the criminal justice records service, will enable the police to enter directly on the police national computer the criminal record information that is currently provided on paper forms. The new Holmes system for the administration of major crime investigations should be available next year, and various other exciting information technology applications are undergoing trials in various police forces.
Less successful has been the attempt to achieve a national computerised fingerprint service. I shall not detail the problems that have arisen, particularly as litigation is still in progress, but it is important for those problems to be overcome so that a truly effective, easily accessible national fingerprint service can be provided for every police force.
The introduction of closed circuit television in many areas has been a great step forward, and I welcome the Government's commitment to increasing the number of CCTV schemes. In my constituency, the town of Barry benefits from a CCTV system, covering much of Holton road and Broad street. The system was purchased by


Vale of Glamorgan borough council with the help of a grant from the Welsh Office. It is operated by civilians at the civic offices.
Ideally, such systems should be bought and operated by police forces, not local authorities. That would have two advantages. First, the public would be reassured that there would be no abuse of their civil liberties. I understand that in the recent well-publicised case of a CCTV video being marketed and then withdrawn from sale the material used was from a private system operating in a shop, not from a public system. Still, it is important that the doubts of people who are genuinely concerned about an invasion of civil liberties be allayed. I therefore believe that CCTV should be under the exclusive control of the police, who must be responsible for storing and eventually erasing the tapes.
The second advantage of the police controlling the cameras would be ensuring minimum delay and avoiding any breakdown of communications in transmitting information from the person viewing the screen to the police officers required to attend the scene. Police officers, police cars and police stations need to be equipped with the latest technology.
Last year in the United States of America I was lucky enough to go out on patrol with a police officer in Seattle. His on-board computer system was linked to a national database covering all 51 states. He could instantly call up full details of a suspect vehicle, including where and when purchased, whether subject to hire purchase—and if so, how much—and who the registered owner was. That information made it easy to check whether the driver was the registered owner or was driving with his consent. The police officer could also call up details of any previous convictions of the registered owner and information about whether he was in breach of bail in any of the 51 states.
In our own comparatively small country our police patrol drivers should be given similar ready access to information. Furthermore, improved personal and vehicle radios should be introduced as standard equipment, with encryption systems in control rooms and individual sets so that criminals cannot listen in to police messages.
The equipment for processing suspects at most of our police stations is poor. At present, when a suspect is interviewed and charged, much valuable police time is wasted. In my experience as duty solicitor at Barry police station before I was elected to this House, I saw experienced police officers typing out charge sheets with two fingers on ancient manual typewriters. I understand that the system has slightly improved since my day, with word processors now in operation.
What is really needed is a national computer network. Standard software should be stipulated by the Home Office to enable an officer to retrieve a particular section of the Theft Act and then simply type in the relevant details, before producing a perfect and legible charge sheet every time. That would not only save the officer time; it would reduce subsequent problems and delays in amending charges. Information such as charge sheets, lists of previous convictions and advance disclosure could be transmitted to the court, the Crown Prosecution Service, the defence solicitors and the

probation service—as necessary—electronically and at the touch of a button, thereby avoiding delays and reducing the need for court adjournments.
A great deal of time is currently spent by police officers and typists transcribing the relevant sections of recorded interviews. Entire interviews could be transcribed automatically using voice recognition systems, and then checked for accuracy against the tape. That would stop disputes about whether all the relevant sections of a tape had been transcribed; and it would usually avoid the need to bring tapes to court.
Computerised charge sheets and transcription facilities would help to put the interviewing officer back on the beat or on motorised patrol more quickly. The Home Office should also liaise with the Lord Chancellor's Department to ensure that court lists, warrants, witness summonses and production orders relating to prisoners are electronically transmitted and accessible to all who need them. The days of a prisoner not being produced at court at the right time because a production order has gone astray, or of a prisoner being bailed when he is already in breach of bail at another court, should be over.
My last and most important point is that the Home Office should take action to ensure that all police forces adopt the same computer system for the retrieval of central criminal records and the collection of local data. I am a strong supporter of local police forces rather than a national police force. However, it is plain crazy to allow forces to operate different computer systems which may be incompatible with those of neighbouring forces. In a huge murder hunt such as that for the Yorkshire Ripper, data collected in crimes in one area should be equally accessible by all police forces in case a pattern emerges that hastens the apprehension of the criminal.
Thanks to improved roads and cars, the criminal is more mobile than ever before. Much has been done to meet the increased threat. On 1 November last year, my right hon. and learned Friend the Home Secretary launched the first national blueprint for police use of computer technology, which stressed that police forces must act in partnership with each other and with other parts of the criminal justice system when using and buying new technology. That was certainly a big step in the right direction, but I would like the Home Secretary to go further.
The Home Office needs to consult all police forces, evaluate all the available equipment, commission new equipment where necessary and then initiate a central, standardised purchasing policy for all the equipment that I have mentioned. That would be expensive initially, but would save many hours of police and civilian time thereafter. It would lead to much greater efficiency and enable the police to spend more time out catching criminals, deterring crime and reassuring the public.
A central equipment purchasing policy operated by the Home Office would achieve economies through bulk purchase discounts and would guarantee compatibility between police forces. The pressure on local police budgets is such that only a central purchasing policy can ensure that all our police officers have the equipment they need to preserve the peace and maintain the reputation of the British bobby as the best in the world.

The Minister of State, Home Office (Mr. David Maclean): I am grateful to my hon. Friend the Member for Vale of Glamorgan (Mr. Sweeney) for initiating tonight's debate on police information technology. He has long had an interest in this important subject. I am grateful also to my hon. Friend the Member for City of Chester (Mr. Brandreth), who has been present throughout the debate. I know that he is also keen on this particular subject, hence his presence here tonight.
Immense opportunities are offered by technology in the ever more sophisticated fight against crime. The Government are committed to ensuring that the right technology is available to the police where and when it is needed. All forms of technology are being brought to bear in the constant fight against crime, and one area in which British technology is showing the way is the application of DNA techniques to crime detection.
The national DNA database went live in April 1995. The database is revolutionary. It is the first of its kind anywhere in the world and relies on leading-edge technology and up-to-date DNA techniques. I am delighted to announce that more than 100 hits have been made in the early months of operation, matching DNA profiles from individuals to profiles from traces left at scenes of crime, and profiles from traces left at one scene with those from another. The number of samples sent in by the police and the high number of profile matches already achieved bode well for the continuing success of the database.
Rapid access to information is the life-blood of operational policing and one of the key challenges facing the police service is how to take full advantage of the information technology revolution. The police are not newcomers to information technology. This year, the police national computer marks 21 years of service to the police community, and never has it been more relied on or more frequently used than it is now. In 1994, more than 47 million transactions were processed and 98 per cent. of customers considered the service to be either good or very good. However, the pace of change is quickening, and, even in the past year, several important milestones have been achieved.
Police effectiveness depends on the accuracy of the information that is available and also on how quickly it can be obtained and subsequently updated. To this end, Phoenix, a new database on the police national computer, became operational in May 1995. It allows the police to enter and retrieve records of arrests and convictions for all reportable offences directly rather than having to rely on the microfiche collection held at the national identification service. Phoenix will eventually be linked directly to the courts, the Crown Prosecution Service and the rest of the criminal justice service. That will ensure that records of convictions are promptly updated and that the judiciary has immediate access to the information on previous convictions which it requires for sentencing purposes.
The extremely complex task of transferring the microfiche records held by the NIS to Phoenix is now under way, and when complete it will form the kernel of a database of immense operational value to the police. I was delighted that we were able to invite forces to begin to enter records of cautions on to the system from

1 November. Until now, records of cautions have mainly been kept only by the force which issued them. In future they will also be available nationally.
We have a substantial programme of enhancements for Phoenix, which has been agreed with the police service. The first and most important of the enhancements will be QUEST, a database analysis facility that will allow investigators to search the collection for all offenders meeting particular descriptions. It will be a real advance in the investigation of serious crime.
Within a few more years, Phoenix will be linked to NAFIS, the national automated fingerprint identification system, which will provide the forces of England and Wales with a world-class system for the identification of offenders. NAFIS will incorporate the national fingerprint collection of over 5 million records, including those from cautioned offenders. It will be rolled out to the national identification service and eight pilot forces from the middle of 1997 and will achieve national coverage, replacing all existing fingerprint matching systems, by the year 2001. NAFIS will be a distributed system that will use police national network services for data communications. Common data and system services will be co-located with the police national computer.
What is the police national network? It is already in place as the communications backbone for the new developments to which I have referred. It provides a telephone network in addition to a data packet service and is tailored, as is Phoenix, to the needs of the police and to those of the wider criminal justice community. Provided by Mercury, the PNN is an excellent example of the way in which co-operation between the public and private sectors can work to the benefit of all.
Improved radio communications are a must for busy operational offices. The public safety radio communications project has been created to replace existing police service radio systems with the latest state-of-the-art digital technology and common European standards. It is envisaged that the systems will use new frequency bands reserved for public safety organisations throughout the European Union. After consultation with the Association of Chief Police Officers, the project will proceed to the next phase and directly involve the private sector via the private finance initiative.
The new systems will offer many advantages. Harmonised European frequencies will substantially reduce continental interference and high-grade encryption will see an end to illegal monitoring of police broadcasts. Mobile data facilities will allow access to remote databases such as criminal records and vehicle information. My hon. Friend the Minister for Vale of Glamorgan will be pleased to know that trials are already taking place in which radios in police vehicles are being linked to the police national computer. These developments will lead to more efficient and effective management of police resources. I know that my hon. Friend the Member for City of Chester will be interested to know that video cameras in police cars could be linked to the police national computer.
In addition to these centrally provided services, a wide range of computing applications are already installed in forces. We must ensure that the overall investment in police information technology, which is running at some £150 million a year, is used as effectively as it possibly can he. In this new technological age, the somewhat


artificial boundary between the centrally provided systems—the PNC, NAFIS and the PNN—and all the local systems will disappear. We now need to think about links between systems as much as the systems themselves if the full benefits are to be realised. That is why, at the end of last year, the Home Secretary launched the first ever national strategy for police information systems—unfortunately nicknamed NATSPIS. This blueprint will ensure the development of cost-effective standard systems which meet the needs of all forces and will communicate with each other whenever necessary. That strategy is fully supported by chief constables and police authorities and is being driven forward by lead forces, which will develop standard systems with support from the centre.
My hon. Friend the Member for Vale of Glamorgan will be pleased to know that work on the top five priority applications—command and control, custody, management information, case preparation and crime reporting—is already under way. The case preparation application to be used by all forces will be linked to case management systems within other criminal justice organisations, such as the courts and the Crown Prosecution Service. Information fields available will include details of the availability of police officers and witnesses. That should help to reduce the number of adjournments and delays caused by the lack of relevant information in the courts. On a wider front, the initiative on co-ordination of computerisation in the criminal justice system—CCCJS—seeks to improve communications throughout the criminal justice system through the use of appropriate technology. Recent pilot projects involve links between the Driver and Vehicle Licensing Agency, Swansea, and Reading magistrates court and links between the DVLA and Dyfed Powys police for the direct provision of driver information and electronic mail links between various agencies in Suffolk and Hampshire including, on a test basis, solicitors and banisters in private practice.
My hon. Friend mentioned that improved methods for transcribing tape-recorded interviews should be considered. A working party comprising representatives of ACPO, the CPS and the Home Office is currently examining a number of alternative methods of passing details of police interviews to other agencies in the criminal justice system. That will include consideration of the feasibility of voice recognition computer technology. Independent research commissioned by the Home Office has demonstrated that records of taped interviews prepared by trained civilian summarisers cost less, are more accurate, and of a higher overall quality than those prepared by police officers with two fingers and the old Remington, which my hon. Friend mentioned. Following this research, the efficiency scrutiny which was published in July recommended that all forces should prepare and implement a programme to employ civilian summarisers.
I come now to the new police information technology organisation—PITO. There can be no doubt that the strategy heralds a new era in police computing and it demands some business process re-engineering to the way we do business in central Government. That is why we are considering proposals to set up a new police information technology organisation to take over from the current science and technology group in the Home Office. That will be the new centralised purchasing organisation, but the police will be in the driving seat, not the bureaucrats or me.
That new organisation will bring the police into the centre of decision making and allow both local and national developments to be looked at as an integrated whole. We propose to set up PITO next year on an interim basis with its own chief executive and advisory council on which the police service and police authorities will be represented, and then to move it on to a fully independent executive non-departmental public body as soon as we can find time for the necessary legislation. Those changes in strategies and structures will help us to maintain and co-ordinate momentum in a rapidly changing world. Division between police departments, forces and criminal justice agencies have to be transcended. Only if we are all working to a common end will we be able to turn the strategy into a reality.
In addition, as the whole House must agree, to this impressive set of computing and communications developments, other forms of technology are making a huge contribution to police effectiveness and public safety. Nowhere is technology moving faster than in the world of closed circuit television. There cannot he many people who have not noticed the recent spread of those watchful guardians. High streets, shopping centres, industrial estates, schools, villages, community centres and other areas have all benefited from the presence of the cameras. The police have embraced the new technology enthusiastically, sometimes running their own systems, but more often working in partnership with others such as local authorities or town centre management committees. CCTV is overwhelmingly popular, with the operators, the police and the general public.
I have seen the video that was issued earlier this week, "Caught in the Act". I can tell the House that it is of poor quality and hyped up by the producer to try to whet the appetites of a gullible public to buy it. I totally deplore the misuse of any CCTV material for unauthorised purposes, even poor-quality stuff like that, which will strain one's eyes if one tries to watch it. We strongly recommend that every CCTV system should have a code of practice. The bidding guidance for the CCTV competition, which was announced by my right hon. and learned Friend the Home Secretary recently, with £15 million of taxpayers' money to be bid for, makes it clear that each scheme must have a code of practice to guard against unauthorised disclosure of material.
There is no doubt that CCTV helps to prevent crime. It helps the police to detect crime. It assists with the investigation of crime. It gives the police extra, incontrovertible evidence to help prosecute and convict more criminals and—I know that my hon. Friends are particularly concerned about this point—it reduces the fear of crime among the general public. It also has other, less serious social benefits, such as finding lost children, spotting fires in the early stages and identifying people who have been taken ill on the street.
The results speak for themselves. My hon. Friend has already mentioned how the town of Barry benefits from CCTV. There are examples of crime reductions from all over the country. I shall give just a few of the most up-to-date cases. In the four years since the Newcastle scheme has been running, in the city centre there have been 6,200 fewer crimes. There have been 800 arrests due to the cameras, and in only six cases did the suspects plead not guilty. They were still found guilty.
In Swansea, in the year up to August 1994, there were 147 instances of taking from a motor vehicle. After the cameras were installed in December 1994 and up until August 1995, there have been just 10. In Northampton, there has been a 57 per cent. reduction in crime since the cameras were installed. In Berwick-upon-Tweed, a small town with a small-scale, four-camera system, burglary is down 69 per cent., criminal damage is down 41 per cent., and theft is down 24 per cent.
I could go on, but I will not. Everywhere that CCTV has been installed can give similar reports. CCTV works. As John Stevens, the excellent chief constable of Northumbria said recently:
We are leading the world in CCTV technology and its use. In every case where cameras have been installed, crime has dropped and the number of arrests increased.
We in the Government are doing our bit to help. Last year, we initiated a CCTV challenge competition, which eventually distributed £5 million to help fund 106 additional schemes throughout the country. That levered in £13.8 million of private and local council finance. Now

we have announced another competition. This time we are offering a total of £15 million and we hope that we can fund at least 300 schemes.
Individually, each of those systems and services is impressive and offers the police service many benefits, but, taken together, the contribution that the whole portfolio of information technology projects will make to operational policing will be much greater than the sum of its parts. The police service is spending £750 million on IT over the current five-year period. We are committed to helping the service to gain the maximum value from that huge investment, and to ensure that it will play its full part in the vital task of making our communities safer places.
I thank my hon. Friend once again for enabling me to tell the House tonight of the exciting developments that are taking place in the British police service, the finest service in the world.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock till Monday 4 December, pursuant to Order.